Global copper markets have experienced an exceptional rally, with prices climbing from around USD 8,700 per tonne at the beginning of 2025 to record highs above USD 13,000 per tonne in January 2026—an increase of approximately 52%.
This sharp rise goes well beyond typical cyclical price movements and reflects a convergence of unusual forces, including physical supply disruptions, heightened financial speculation, and strategic trade policy concerns.
According to Bernstein analyst Bob Brackett, current copper prices are trading well above historical norms, indicating a clear imbalance between supply, demand, and policy-driven expectations.
One of the key drivers behind copper’s strong performance has been supply disruption at some of the world’s largest copper mines. Brackett points to operational issues at major assets such as Kamoa-Kakula and Grasberg as significant contributors to reduced supply over the past year.
These disruptions have occurred against a backdrop of broader structural challenges facing the global mining sector, including rising capital costs, geopolitical risks in key producing regions, and increasingly stringent environmental regulations.
With supply struggling to keep pace with growing demand—particularly from electrification, renewable energy, and infrastructure projects—the physical market has provided a strong foundation for higher prices.
Beyond physical fundamentals, financial speculation has played a substantial role in pushing copper prices to new highs. Bernstein notes that net futures positioning is currently elevated, reflecting strong participation from hedge funds and other financial investors.
As investors have increasingly positioned for a prolonged bull market, speculative flows have amplified price volatility and accelerated gains beyond what near-term fundamentals alone might justify.
Brackett cautions that the combination of tight supply and aggressive speculative positioning can drive prices significantly above intrinsic value, increasing the risk of sharper corrections over the medium to long term.
The most prominent driver of recent price action, however, has been additional demand stemming from inventory stockpiling in the United States. Traders and end users have built inventories in anticipation of potential U.S. tariffs on refined copper.
Current proposals suggest tariffs of 15% could be imposed from January 2027, potentially rising to 30% by January 2028. These risks have prompted market participants to accelerate imports in order to avoid higher future costs.
As a result, copper priced on the CME has traded at a substantial premium to London Metal Exchange (LME) prices across all maturities, creating a powerful arbitrage incentive to ship copper into the U.S. market.
Brackett notes that this widening price spread between CME- and LME-priced copper has driven a surge in U.S. imports. Since April 2025, Comex copper inventories have increased by roughly 300,000 tonnes, underscoring the scale of stockpiling activity.
This build-up has not only influenced short-term pricing dynamics but has also reshaped global trade flows, with the U.S. emerging as a key destination for copper amid tariff-related uncertainty.
Bernstein outlines four potential tariff scenarios that could shape copper’s outlook, with the base case assuming no tariffs on refined copper.
Brackett argues that proposed tariffs of 15% or 30% are economically unjustified. The U.S. currently imports around half of its copper consumption, with more than 90% sourced from close trading partners such as Chile, Canada, and Peru.
A 15% tariff would raise the U.S. copper import bill by an estimated USD 1.35 billion. At the same time, global smelting capacity is already in surplus and economically inefficient, making large-scale new investment in U.S. refining capacity highly unlikely.
Rather than imposing tariffs, Bernstein highlights a potential bilateral copper agreement with Chile as a more pragmatic solution for securing U.S. supply.
Granting tariff exemptions for Chilean copper would likely eliminate the LME–Comex price premium, as U.S. buyers would no longer be willing to pay elevated prices when duty-free imports are available.
Chile produced approximately 5.5 million tonnes of copper in 2024 and has more than one million tonnes of smelting capacity—sufficient, Bernstein argues, to meet U.S. demand without resorting to protectionist measures.
Another critical consideration is valuation. Copper is currently trading far above its marginal cost of production. With inventories equivalent to roughly nine days of global demand, Bernstein estimates prices are about 121% above marginal cost.
Historically, purchasing copper at such elevated premiums has resulted in negative long-term returns, consistent with Bernstein’s margin-reversion framework. That said, short-term gains remain possible while prices continue to be driven by policy uncertainty and speculative flows.
Copper’s powerful rally over the past year reflects a rare alignment of supply disruptions, financial speculation, and trade policy concerns. While upward momentum may persist in the near term, current price levels embed significant risk.
Over the medium to long term, copper’s trajectory will depend on how tariff uncertainties are resolved, the recovery of supply, and the sustainability of global demand growth. With prices trading far above marginal cost, investors are advised to remain cautious and closely monitor underlying fundamentals for signs of potential correction.
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