Summary of the News in Plain Language
Industrial metals, often referred to as the "Dr. Copper" by the industry (because copper's demand spans almost all industrial sectors, and its price trends can accurately reflect the health of the economy), have recently skyrocketed. Domestic copper spot prices broke through 110,000 yuan per ton, setting a new record high. Soon after, the price of copper on the London Metal Exchange (LME), the global pricing benchmark, also surpassed 14,600 US dollars per ton, breaking the record it had held for several years. The price has increased by 47% in the past 12 months, nearly doubling in just half a year.
This surge is not due to the familiar scenario of booming real estate or large-scale infrastructure projects leading to a shortage of copper. The real reason is the recent announcement by the United States that it plans to impose tariffs on copper imports. As a result, global traders have hoarded copper in the US, depleting the supply in the Eurasian markets. Additionally, there have been widespread issues throughout the entire copper supply chain, from mining to smelting. On the long term, the massive demand from the AI and new energy sectors is providing support for the price. Copper has now transformed from a common building material into a strategic commodity essential for the digital economy and energy transition, and it is unlikely to return to its previous low prices for a long time.
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Detailed Explanation of the News
1. How Unconventional is This Copper Price Rise?
In the past, when commodity prices soared, it was usually because of a strong economy with all sectors operating at full capacity, driving up demand for raw materials. However, this copper price increase is an unusual case of "false demand driving real price increases":
On the day the price hit a new record, the US market was closed for Labor Day, and most investors around the world were cautious and reluctant to buy at high prices. Yet, the price continued to rise on its own momentum. Even industry analysts pointed out that this was not due to a global surge in demand but rather a localized shortage. It's as if 100 tons of copper remained on Earth, but they just moved from warehouses in the east to those in the west, leaving the eastern warehouses empty and forcing buyers to pay exorbitant prices.
2. Why Did the Copper in Eurasian Markets Suddenly Disappear?
The direct cause of this price surge was the US government's policy: the US has hinted that it will impose high tariffs on imported refined copper. The necessary report on the tariffs was due two months ago but has yet to be released, sending a clear signal to traders that tariffs are inevitable. As a result, traders have been rushing to ship copper to the US. In July 2026 alone, 200,000 tons of copper were imported, the highest amount since records began in 2014. The total copper inventory in the US has now reached 1.4 to 1.5 million tons, the highest level in a century. This has led to a significant reduction in the supply in Eurasian markets, driving up prices.
3. Even More Concerning than Artificial Hoarding: The Global Copper Supply Chain Is Collapsing
Even without the US's tariffs, the copper supply was already under pressure. This time, problems occurred at every stage of the supply chain, from mining to smelting:
- Chile, the largest copper-producing country, has faced extreme weather this year, disrupting mining and transportation. Although copper prices in Chile rose by 40% in August, the total revenue from copper sales decreased by 3.2%, indicating a significant drop in production and exports.
- Geopolitical conflicts in the Middle East have disrupted shipping through the Strait of Hormuz, affecting the supply of sulfur, a key ingredient in copper smelting. The price of sulfur has risen by 47% in half a year, raising production costs for many copper smelters in Africa to as high as $7,000 per ton, leading to shutdowns of smaller plants.
- The El Niño phenomenon is exacerbating the crisis: heavy rains in South America have flooded mining areas, and droughts in Africa have cut off water supplies, affecting copper production. The top copper-producing companies, which account for over 70% of global output, saw a 4% decline in production in the first half of the year. In 2026, global copper production is expected to decline for the first time in a decade, indicating a systemic issue across the industry.
4. Copper from a Building Material to a Strategic Commodity for AI and New Energy
The long-term logic behind the copper price rise is completely different from the past. In the past, 70% of copper demand came from real estate, household appliances, and traditional infrastructure. Now, two new major consumers have emerged: the AI and new energy sectors. For example, a high-performance AI server used for training requires 3 to 6 times more copper than a regular server, and building a 1-gigawatt AI data center requires 2.5 times more copper than a traditional data center. By 2030, the global demand for copper in AI will increase by 1 million tons. Moreover, building data centers requires not only servers but also infrastructure such as power lines, substations, and upgraded electrical grids, all of which consume copper. The demand from new energy vehicles, charging stations, and wind and solar power will also drive continuous growth in copper demand over the next decade.
5. How Does This Affect Ordinary People?
The impact of rising copper prices will soon be felt by everyone:
The cost of household appliances, new energy vehicles, and power grid infrastructure will increase, raising the cost of replacing these products. As the cost of copper in power grids rises, electricity prices are likely to increase. Copper has become a strategic resource like oil, and more countries will start hoarding it. Copper prices are unlikely to return to their previous low levels, meaning industries that rely on electricity will face higher raw material costs in the long term.