Copper prices hit record high of $12,000, rise 35% YTD — here's why

Copper prices crossed the $12,000-a-ton mark for the first time, extending their recent rally, as mine disruptions heightened worries over the supply of the crucial industrial metal.

The benchmark three-month copper on the ⁠London Futures Exchange held close to its record high and was up 0.1% at $12,076.5 a ton on Wednesday, December 24. Last evening, copper prices on the London Metal Exchange rose as much as 2% to an all-time high of $12,159.50.

Meanwhile, on a year-to-date (YTD) basis, copper has surged over 35% — heading for its strongest annual gain since 2009.

What's behind the rally in copper prices?

The possibility of US import tariffs on the metal has been a key driver behind this year’s price rise. To avoid paying higher prices later, buyers in the US are purchasing copper now and storing it in warehouses. As a result, copper inventories in US warehouses are increasing. The expectation of tariffs is also creating arbitrage opportunities, as per a Bloomberg report.

Supply concerns that had lingered for years have moved to the forefront in recent months. A series of fatal incidents — including an accident at Indonesia’s second-largest copper mine, an underground flood in the Democratic Republic of Congo, and a deadly rock blast at a Chilean mine — have disrupted operations and tightened global output.

Elsewhere on the supply side, China's top copper smelters will cut production by over 10% in 2026 to counter overcapacity that has led to increasingly distorted copper concentrate processing fees, a Reuters report stated.

Meanwhile, demand outlook remains strong, underpinned by long-term electrification trends that require vast amounts of copper for power grids, clean energy infrastructure and manufacturing.

Adding to this optimism, investors expect copper consumption to climb further as the artificial intelligence (AI) sector drives rapidly rising electricity needs.

Copper prices could rally to $15,000

According to Citigroup, copper might reach $15,000 in a bull-run case scenario, where a softer dollar and potential US interest-rate cuts increase the metal’s attractiveness, encouraging stronger investor buying.

However, the surge has its sceptics. Goldman Sachs analysts warn that the recent price jump is largely fueled by investor speculation about future market shortages, rather than current supply and demand fundamentals.

Meanwhile, Morgan Stanley analysts are expecting copper demand to surpass supply by roughly 600,000 tons next year, with shortages expected to deepen in the following years.

Copper price outlook

Brokerage firm ICICI Direct believes that copper prices are expected to hold their ground and move higher on tight supplies and strong demand from the US. Lower treatment and refinery charges for the coming year have again sparked concerns over raw material availability.

"Prices would also get support on growing bets of a fresh round of stimulus from China to counter the slowdown in the property sector. Moreover, increasing prospects of loose monetary policy in the US would again strengthen the bullish bias in the red metal. Meanwhile, investors will be eyeing key economic numbers from the US to get more clarity,” said the brokerage firm in a note.

Back home, copper prices surged over 1.77% to ₹1,141.45 on MCX on Wednesday, December 24. According to ICICI Direct, MCX Copper Dec is expected to hold support near ₹1112 and move higher towards the ₹1129 level. A move above the ₹1129 level would open the doors towards the ₹1135- ₹1140 level.

(With inputs from Bloomberg)

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.