International copper prices enter a new round of oscillation and adjustment period

Ask AI · Why high inventories can’t conceal the long-term shortage in the copper market?

In the near term, international copper prices have generally fallen, mainly due to factors such as heightened geopolitical tensions in the Middle East, a strengthening U.S. dollar, and inflation concerns triggered by higher energy prices. On March 20, the LME (London Metal Exchange) three-month copper settlement price fell to 11,930 U.S. dollars per ton, down by about 2,500 dollars from the peak in January, a drop of roughly 18%. After LME copper prices broke above 12,000 U.S. dollars per ton toward the end of last year, they briefly touched a peak of over 14,500 U.S. dollars per ton in January 2026, setting the highest level since 2003.

Market analysts believe that the actual situation in the current international copper spot market is driving the copper price’s short-term pullback. First, in recent days, tensions in the Middle East have escalated; high energy prices have intensified market concerns about “supply-driven inflation,” thereby suppressing manufacturing demand for copper. Second, as of mid-to-late March, total global copper inventories exceeded 1.4 million tons, sitting at an absolute peak for the same period in history, especially with copper inventories in U.S. warehouses continuing to rise. Third, under high inflation expectations, at its March meeting the Federal Reserve announced that it would keep interest rates unchanged and still retained the possibility of further rate hikes; market expectations for Fed rate cuts this year have clearly cooled, and a stronger U.S. dollar has made U.S.-dollar-denominated copper more expensive for buyers using other currencies.

Even so, the long-versus-short game in the international copper market is still intensifying. Bears are putting pressure on prices based on short-term fundamental expectations such as rising copper inventories and a slowdown in manufacturing, while bulls continue to look favorably on long-term structural demand from upgrades of national power grids in many countries and large-scale data center construction, believing that the current demand outlook is misaligned with the international copper market’s long-term structural supply shortfall. The International Energy Agency (IEA) research estimates that by 2035 the international copper market may face a 30% supply gap.

On the supply side, the international market’s copper supply is structurally tightening. First, copper mine discovery rates are low: among all copper ore deposits discovered over the past 35 years, only 5% were found in the last 10 years. Second, the ore grade of newly developed copper mines has declined; since 1991, the global average copper ore grade has fallen by 40%, meaning producing the same amount of copper requires more ore. Third, the cost of expanding existing copper mine projects has risen sharply and is approaching the level of developing new projects. Fourth, the cycle from discovery to production for new copper mine projects can take as long as 17 years, and many large projects suffer serious delays and cost overruns during development.

As of March 21, the spot treatment and refining charges (TC/RC)—the core indicator of market supply and demand conditions in the copper concentrate market—remained in a deeply negative range, reaching more than -60 U.S. dollars per ton, and the downward trend is still difficult to stop. This is the most direct and true reflection of the supply tightness pattern at the upstream of the international copper industry chain, and it also means that smelters not only cannot collect treatment charges—instead, they need to pay fees to miners to obtain copper concentrate feedstock. This extreme situation indicates that the prevailing expectations in the international copper concentrate market are for an extreme shortage of supply.

On the demand side, expectations that supply will not meet demand over the medium to long term remain strong. Although demand in traditional industries is steady, strong growth expectations are being brought by emerging fields such as artificial intelligence (AI) infrastructure and renewable energy. Copper, a highly conductive and corrosion-resistant metal, is an important mineral resource supporting electrified energy systems and the construction of AI infrastructure. As the world moves into the electrification era, energy transition will drive strong growth in copper demand across areas such as power grid construction, electric vehicles, building consumables, industrial manufacturing, and data centers. Solar power plants, offshore wind turbines, power grids, batteries, and transmission lines all rely on copper with good conductivity. The scale of planned power grid upgrades in the United States and Europe is unprecedented, and expectations for copper demand are likewise unprecedented. In addition, the explosive global growth of AI data centers in recent years, together with the resulting massive consumption of electricity, will significantly raise expectations for copper consumption.

The market generally expects that the international copper market will enter a “structural shortage era.” A report titled “2025 Metals Transformation Outlook” projects that by 2045, copper demand related to the energy transition will grow by three times. If no new copper mines are brought into production to replace supply, or if there is no significant progress in recycling scrap copper, then by 2050 the global copper shortfall could reach 19 million tons. UBS Group has sharply raised its 2026 global copper market deficit forecast from 8B tons to 407k tons. S&P Global Energy forecasts that global copper demand by 2040 will increase by 50% compared with today, and may even show a supply shortfall of 10 million tons.

Taken together, the current international copper price has already entered a new round of adjustment. In the short term, the international copper market is expected to remain weak and range-bound. The market’s core focus remains on the Middle East situation and the Federal Reserve’s subsequent policy, but any “black swan” event could lead to further price declines. In the medium term, the key lies in the pace and strength of inventory drawdowns. If inventories can fall more than expected, copper prices will gain strong momentum to stabilize and rebound. In the long run, most market institutions still judge that structural demand growth driven by energy transition, AI computing infrastructure, and global power grid upgrades—combined with the rigid constraints on the copper supply side—will continue to provide solid long-term support for copper prices. (Economic Daily reporter Wang Baokun)