Can copper prices break above their historic highs?

Copper prices surged to new record levels as rising geopolitical disruptions combined with strong long-term demand, although analysts warned that the rally may be moving faster than the market’s actual fundamentals.

The latest gains were driven partly by supply concerns linked to tensions in the Arabian Gulf region, where shipping disruptions created broad effects across industrial inputs. One of the biggest concerns for mining companies is the availability of sulfuric acid, a key material used in copper extraction and processing. Traders say restrictions on this input have already started affecting production costs and supplies across parts of the global mining sector.

At the same time, copper demand continues to benefit from the expansion of artificial intelligence infrastructure, the clean energy transition, and rising defense spending. Data center construction has become a major new source of demand, as major technology companies continue pouring huge investments into computing capacity and related electrical infrastructure.

Copper market tests record levels

Nikos Tzabouras, analyst at Tradou, said the copper rally reflects the convergence of short-term supply shocks with long-term demand trends that have been building for years.

He added that copper prices “reached new record highs as structural demand drivers converged with supply concerns,” pointing to the growing impact of geopolitical disruptions and shifts in industrial policy. Copper futures on the COMEX exchange tested historic levels last week and extended their strong gains since August.

He explained that the closure of key transportation routes created immediate supply pressures, especially through its impact on sulfuric acid markets, further increasing pressure on already elevated mining costs.

Beyond the current disruptions, Tzabouras said copper’s long-term outlook remains supported by its central role in several structural growth trends.

He said: “Major technology companies continue allocating capital toward building data centers, while the clean energy transition is gaining momentum due to rising oil prices, alongside expanding defense programs as security budgets increase and geopolitical uncertainty intensifies.”

Why is copper performing so strongly?

Copper’s high electrical conductivity and broad industrial use make it essential for power grids, electric vehicles, renewable energy systems, and advanced computing infrastructure. As governments and corporations accelerate investments in decarbonization and digital infrastructure, demand for the metal has continued rising even during periods of weaker global industrial activity.

However, Tzabouras warned that the strength of the recent price rally may not be fully supported by short-term market fundamentals. Despite the strong optimism and record prices, the market could move back into surplus later this year as additional supply enters the market and demand growth remains uneven.

He said: “Fundamentals are more mixed than record prices suggest, as the market may return to surplus later this year.”

What about stagflation risks?

These warnings come as the global economy faces increasing pressure from higher energy prices and growing geopolitical fragmentation. Elevated oil prices resulting from Middle East disruptions have revived concerns about stagflation returning to parts of the global economy, which could weaken industrial demand for key raw materials including copper if manufacturing activity slows.

Tzabouras said: “Economic uncertainty could negatively affect consumption of critical metals,” adding that the market’s direction will ultimately depend on whether structural demand can offset cyclical weakness.

For now, copper remains caught between two opposing forces: strong demand linked to electrification and technology, and short-term economic disruption risks. Although the long-term narrative remains positive, analysts believe the speed and scale of the recent rally leave the market vulnerable to volatility if sentiment shifts.

Tzabouras added: “The rally may continue, but the industrial metal remains exposed to correction risks in a highly volatile macroeconomic environment.”

UBS raises copper price forecasts

UBS raised its copper price forecasts, citing a positive fundamental outlook supported by supply constraints and continued energy transition demand, despite mixed short-term demand indicators.

The bank increased its 2026 copper price forecast by 13%, while also raising its 2027 and 2028 forecasts by 4% and 3% respectively to $6 per pound, or $13,200 per ton. It also raised its long-term forecast by 10% to $5.5 per pound.

Copper prices on the London Metal Exchange recently climbed back near record highs above $13,000 per ton after a temporary pullback following the outbreak of the Middle East conflict. Physical and paper markets have also returned their focus toward copper and mining-related equities.

UBS pointed to ongoing disruptions and lower production estimates at mines including Kamoa-Kakula and Grasberg. The bank believes energy price volatility will increase the need for sustainable investment in renewable energy, electricity grids, and industrial reshoring, supporting medium-term copper demand.

According to the bank’s supply and demand model, the market is likely to move into deficit, with tighter physical markets and falling inventories expected to support elevated prices.

However, UBS also warned that the market is not currently facing an extremely severe shortage, as demand indicators remain mixed.

The bank added that mine production continues facing pressure while smelter output remains resilient, meaning the expected copper market deficit may take longer to emerge, and existing inventories must first be depleted before a clear physical shortage appears.

UBS noted that persistently high prices will increase pressure toward demand rationing and substitution, making the short-term outlook more balanced following the recent gains.