Copper Prices Hit Record Highs as U.S. Stockpiling and Chilean Supply Constraints Bite

Author: 小澜, Global Zero Carbon Research Center

Copper has truly gone wild this year. Known as the king of commodities, "Dr. Copper" has once again reached historic peaks.

First, domestic spot copper broke through 110,000 yuan per tonne, setting a new record high. Now, London Metal Exchange (LME) copper futures prices also surged past $14,533 per tonne on the evening of September 7, 2026, breaking the previous high set in January this year.

After this surge, copper prices hit the highest record in LME history. As of now, LME copper futures have risen more than 17% year-to-date, with a staggering 47% increase over the past 12 months.

On September 8, 2026, the frenzy continued, with prices touching an intraday record of $14,616 per tonne. As of 4:00 PM Beijing time, LME copper futures remained elevated at around $14,600 per tonne.

This record-setting rally occurred against a backdrop of U.S. exchanges closed for Labor Day and overall subdued risk appetite, underscoring the strength of the drivers behind copper's rise and reflecting the deep structural contradictions facing this critical industrial metal.

The long-term demand story for copper from power grid construction, artificial intelligence, and data center buildouts has been told for a while, but the immediate trigger for this rapid push to new highs is the expectation of U.S. copper tariffs and the global "copper grab" wave now underway.

Cristián Cifuentes, senior analyst at Chilean copper industry think tank Cesco, noted that this rally is "driven more by tariff-induced metal relocation than by robust end-demand," essentially a "localized shortage rather than a global demand surplus."

Meanwhile, Bradesco BBI analyst Rafael Barcellos stated that global copper mine supply conditions are deteriorating. He warned that extreme weather in Chile has forced Antofagasta and Lundin to lower production guidance, further tightening an already stressed spot market.

Caption: LME copper futures prices hit new record highs

Source: Investing

In the past, copper served as a basic construction material, entering its previous growth cycle driven by real estate and large-scale infrastructure. This time, the deep engine propelling copper into a supercycle is AI and new energy.

In particular, the development of artificial intelligence and the rapid construction of data centers have become key drivers of current copper demand growth. AI's demand for copper extends far beyond wires and cables inside data centers; it also means new power generation facilities, transmission lines, substations, transformers, and broader grid upgrades.

High-performance servers used for AI training can contain 15 to 30 kilograms of copper per unit, 3 to 6 times that of ordinary servers. Industry estimates suggest that a 1-gigawatt computing data center uses 2.5 times more copper than a traditional data center. In 2026 alone, global computing cluster construction is expected to add nearly 400,000 tonnes of copper demand, and by 2030, this figure could soar to the million-tonne level.

Long-term bullish copper demand is already consensus, but recently, short-term factors have taken center stage. In particular, hundreds of thousands of tonnes of copper have been shipped to the United States this year as traders seek to profit from higher U.S. copper prices, primarily due to the persistent premium in New York Mercantile Exchange (Comex) copper futures.

According to Bloomberg on August 4, citing data from financial information provider IHS Markit, about 200,000 tonnes of copper arrived in the U.S. in July, the largest single-month inflow since records began in 2014. Including hidden inventories, total U.S. domestic stocks are estimated at 1.4 to 1.5 million tonnes, a century-high record.

The market is still betting that the U.S. may impose tariffs on refined copper. About two months have passed since the U.S. Commerce Department's original deadline to submit a report on tariff necessity to the White House, but the report has yet to be released, and the market continues to price in the possibility of primary copper import tariffs.

Caption: Hundreds of thousands of tonnes of copper shipped to the U.S.

Source: Bloomberg

In other words, large amounts of spot copper are being drained from European and Asian markets, and LME copper inventories continue to decline. Global copper hasn't suddenly "disappeared"; it's all being hoarded in the United States, causing spot tightness in other markets and driving prices higher.

However, the bigger problem lies on the supply side. Global copper supply is experiencing a rare "multi-faceted collapse." In 2026, global copper mine output may see its first decline in a decade.

In the first half of 2026, the combined output of 49 sample copper companies worldwide totaled 8.196 million tonnes, down 4.3% year-on-year, a reduction of 371,000 tonnes. In the second quarter, the year-on-year decline widened further to 4.5%, indicating that supply contraction is not easing but deepening. Meanwhile, full-year production guidance was revised down by a net 38,000 tonnes, with only 6 of 35 sample companies raising capital expenditure.

These 49 sample copper companies account for 72.3% of global mine copper production. This sample coverage means it is not a localized phenomenon in one region but covers nearly three-quarters of global mine copper supply—the "mainstream players." Their collective output reduction signals an industry-wide supply contraction.

Adding insult to injury, Chile, the world's largest copper producer, saw its copper exports in August fall to the lowest level in over a year due to severe winter storms and mine production disruptions. In July and August, heavy rains, snowstorms, and strong winds took turns disrupting mine production and intermittently halting port operations. Chile's copper mining woes are providing strong support to global copper prices.

Data released by Chile's central bank on Monday showed that August copper exports amounted to $4.62 billion, down 14% from July and 3.2% year-on-year, the lowest monthly level since July 2025.

Notably, the decline in export value occurred against a backdrop of sharply rising copper prices. The average copper price in August this year was more than 40% higher than the same period last year. In other words, despite the price surge, export revenue fell, reflecting an even more pronounced decline in actual copper export volumes from Chile.

Caption: Global impact of El Niño

Source: FT

A more hidden thread is sulfuric acid. Geopolitical conflicts in the Middle East have cut off sulfur transport through the Strait of Hormuz, causing the cost of sulfuric acid-dependent wet copper processing in the Democratic Republic of Congo (DRC) to rise to about $7,000 per tonne, up 47% from the end of last year. Overseas wet copper capacity faces widespread contraction. From mines to smelting to sulfuric acid, every link in the copper supply chain is sounding alarms simultaneously.

At the same time, extreme weather is further amplifying supply risks. For copper mining regions in South America and Africa, which together account for about half of global output, the super El Niño is bringing heavy rains and flooding that threaten mining and logistics in Chile and Peru, while drought and water shortages are beginning to constrain hydropower supply in the DRC and Zambia.

Antofagasta and Lundin Mining have respectively lowered their 2026 production guidance ranges to 625,000–655,000 tonnes and 300,000–325,000 tonnes. Data from the International Copper Study Group (ICSG) show that global copper mine production fell 1.1% year-on-year in the first half of 2026, with copper concentrate output declining more sharply at 2.6%. Industry giants Codelco and Freeport-McMoRan both saw double-digit production declines.

Morgan Stanley has also revised its previous growth expectations down to roughly flat or slightly negative—meaning global copper mine annual output could see its first annual decline since 2017.

As demand from new energy vehicles, high-voltage power grids, and AI data centers for computing power and electricity consumption intertwines and stacks up, copper is evolving from a basic commodity into a strategic resource that controls the lifeline of future energy and the digital economy.

In the short term, Chilean mine production, DRC export policies, U.S. tariff policies, and global inventory changes are key variables to watch. In the medium to long term, aging global mines, lengthy new mine commissioning cycles, combined with sustained demand from AI computing, power grids, and new energy, are expected to maintain a tight copper supply-demand balance.