The Global Game Behind the Copper Price "Cochette": A "Copper Rush" Directed by AI, Tariffs, and Mines
Hello everyone, I'm your financial journalist. Recently, the copper price has once again become the focus of the market. It soared to record highs, making everyone exclaim, "Copper is going to the moon!" only to then plummet as quickly as it had risen. This pattern of sharp increases, followed by fluctuations, has left many investors and industry insiders utterly confused.
Today, I won't use jargon; instead, we'll break down this news in plain language to understand what's really happening and why this industrial metal has become so sensitive and expensive.
Summary of the Key Points
In short, the copper market in 2026 is undergoing an unprecedented transformation. The price surge was driven by three factors: a shortage of copper from mines, the United States' rush to stockpile copper, and the high demand from AI and the new energy sector.
However, the good times didn't last long. As people tried to profit quickly and secure their gains, and given that the U.S. tariff policies were not yet fully implemented, there were concerns that the stockpiled copper might become worthless, leading to a rapid price correction. Today, the copper price is no longer determined solely by supply and demand; it's also a complex game involving policy expectations, inventory movements, and market sentiment.
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Five Key Dimensions to Understand Copper Price Volatility
1. Why the Copper Price Had a Sudden Stop? – Profit-taking and Policy Uncertainty
After breaking through the 110,000 yuan per ton mark in early September, the price dropped back to around 108,000 yuan, a decrease of about 2%. This can be attributed to three main reasons:
- Profit-taking: Copper prices had risen so sharply that many early investors decided to sell to realize their gains.
- A Stronger Dollar: Geopolitical conflicts have caused energy prices to fluctuate, leading to inflation concerns. There's speculation that the Federal Reserve might not cut interest rates easily, possibly keeping them high. A stronger dollar and higher U.S. Treasury yields are negative for copper, a commodity priced in dollars, as it increases the cost of holding it.
- Tariff Uncertainty: Investors were betting on U.S. tariffs on imported copper, hoping to profit from the price difference. But now, there's doubt that tariffs will be imposed, or if they are, the low rates could lead to a surplus of copper in the market, pushing prices down.
2. The Hidden Challenges of Mining: Why Copper is Becoming More Difficult to Extract
The fundamental reason for the price increase is a chronic shortage of copper resources.
- Decreasing Ore Quality: Major copper mines (like Codelco in Chile and Glencore) are facing a decrease in the copper content of their ores. More ore is needed to extract the same amount of copper, leading to declining production. For example, Glencore's own copper production has decreased by 41% compared to 2018.
- Negative Processing Fees: The cost of processing copper ore into refined copper has turned negative (-200 USD per ton), indicating a severe shortage. Smelters are paying to obtain ore, which reduces their profits and may even lead to production cuts, further tightening the supply of refined copper.
3. The U.S. "Stockpiling Game": A Cross-oceanic Inventory Shift
This is the most unique and dramatic factor in the current price surge.
- Tariff Arbitrage: The Trump administration initially imposed a 50% tariff on copper semi-finished products but not on refined copper. Traders then moved copper from Europe and Asia to the U.S. in anticipation of future tariffs, hoping to profit from the price difference.
- Inventory Imbalance: As a result, COMEX warehouses in the U.S. are filled with copper (accounting for nearly 70% of global inventory), while LME warehouses in Europe and Asia are empty.
- Global Tension: Although the total global copper supply hasn't changed, the distribution has shifted, making copper extremely scarce in these regions and driving up prices. Goldman Sachs estimates that the supply gap outside the U.S. has increased from 60,000 tons to 650,000 tons.
4. New Demand Drivers: AI Data Centers as a Major Consumer
Previously, copper was mainly used in power, household appliances, and construction, with relatively stable demand. Now, two new sectors are driving demand:
- New Energy: Solar, wind, electric vehicles, and energy storage require large amounts of copper for wires and cables.
- AI: The growth of AI requires more efficient cooling and power supply in data centers.
- Liquid Cooling: Data centers use liquid cooling for high-performance chips, consuming large amounts of copper.
- High-Voltage DC: High-voltage DC systems also require copper.
- Projections: Morgan Stanley predicts that copper demand from data centers could double to 1.3 million tons by 2028, making AI a major driver of copper consumption.
5. What's the Future? – Balancing Expectations and Reality
It's hard to predict the next move in copper prices, as they are heavily influenced by market expectations.
- Short-term: Tariffs: The U.S. copper tariff report at the end of September is crucial. If tariffs are imposed and are significant, prices may rise further; if not, the stockpiled copper could flow back to the market, causing a price drop.
- Medium-term: Price Suppression: High prices may deter downstream manufacturers from buying, leading to the search for alternative materials. This negative feedback could limit price increases.
- Long-term: Shortage: Unless global investment in copper mines increases and the decline in ore quality reverses, the structural shortage will persist.
Implications for Everyone:
Copper price fluctuations are no longer just a reflection of economic cycles; they are also influenced by geopolitics (U.S. tariffs), technological revolutions (AI), and supply chain changes (inventory shifts). Investors should pay attention to both supply and demand and U.S. policy trends. For businesses, hedging (locking in prices) is more important than ever, as the volatile market can quickly erode profits.