Summary of Key Points
Recent increases in copper prices in New York and London have been driven by three main factors: first, the uncertainty surrounding U.S. policies regarding whether to impose import tariffs on refined copper by the end of June, which has caused the market to react in advance; second, global copper mine supply falling short of expectations due to production issues at two major mines; third, the ongoing growth in demand for copper driven by advancements in artificial intelligence (AI) and energy transition. Additionally, investment banks such as Goldman Sachs and Citibank have raised their copper price forecasts, further reinforcing bullish market sentiment.
#### 1. Uncertainty over U.S. Copper Tariffs Driving Prices
The U.S. Department of Commerce is required to submit a report on the copper market to President Trump by June 30 recommending whether to impose import tariffs on refined copper. This policy is like a “boot hanging over everyone’s head” – no one knows the outcome, but there is concern that imported copper will become more expensive after the tariffs are implemented, leading to increased purchases and higher prices.
Last July, copper prices plummeted by 20% in a single day because the proposed tariff plan was milder than expected: refined copper would not be taxed immediately, but rather over a phased period starting in 2027. With this new assessment deadline approaching, markets are once again nervous, fearing that the tariffs could be more stringent this time.
This uncertainty has also created opportunities for profit-making: since U.S. copper prices are higher than elsewhere, traders import copper and sell it in the United States, further driving up local prices at ports.
#### 2. Mine Supply Disruptions Lowering Global Supplies
Global copper mine supply is lower than anticipated. Goldman Sachs has reduced its forecast for copper supply growth in 2026 by 350,000 tons, mainly due to issues at two major mines:
- The Grasberg mine in Indonesia and the Kamoa-Kakula mine in the Democratic Republic of the Congo, both of which are experiencing production difficulties and will not return to full capacity until 2028. These are significant copper producers, so reduced output has led to a global shortage, which in turn has pushed up prices.
With lower supply and unchanged demand, the gap between supply and demand has widened significantly – Goldman Sachs has increased its estimate of the supply shortfall outside the United States from 60,000 tons to 640,000 tons, a tenfold increase that directly supports copper price increases.
#### 3. Long-Term Demand Drivers for Copper
The demand for copper is not short-term but rather has a strong underlying foundation:
- AI Demand: AI servers require large amounts of copper for circuits and cooling systems. As AI becomes more prevalent, the demand for servers and thus copper will continue to grow.
- Energy Transition Demand: Electric vehicles, solar panels, and wind power equipment all rely on copper – the motors and battery connections in electric vehicles, as well as the towers and generators in wind power facilities, all require substantial amounts of copper. These developments represent long-term trends, meaning copper demand will remain strong.
Analysts describe this demand as “resilient,” indicating that it is unlikely to decline despite short-term market fluctuations.
#### 4. Investment Banks Bullish on Copper Prices, with Supply Shortages as a Key Factor
Both Citibank and Goldman Sachs have raised their copper price forecasts:
- Citibank expects copper prices to reach $14,500 per ton this month and $15,000 per ton within the next year.
- Goldman Sachs has raised its forecast for year-end prices from $12,465 to $13,735 (an increase of over 10%).
Their bullish arguments are consistent: insufficient supply (due to mine issues), unchanged demand (from AI and energy transition), and supportive tariff sentiment (at least until the end of June).
However, they also note that tariff policies pose the greatest risk; if the U.S. decides to postpone the tariffs, copper prices may not rise as quickly. Nevertheless, their baseline scenario is a continued delay in the implementation of the tariffs, so there is no need for excessive concern for now.
#### Conclusion
The rise in copper prices is not accidental but results from a combination of tight supply, strong demand, and policy uncertainty. In the short term, market sentiment will remain volatile until the tariff policies are finalized. In the long run, however, the demand driven by energy transition and AI will continue to support copper prices. As long as supply does not keep up, prices are likely to remain high. Understanding this logic helps explain why copper prices have been on the rise recently.