Why is the copper price rising?

Important information - the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

Attractive fundamentals

The price of copper, like any investable asset, is largely driven by the balance of supply and demand. The sweet spot is high and rising demand against a backdrop of constrained supply. And that is what has characterised the copper market recently.

What’s driving demand for copper?

Some of the big growth industries of the future are heavy users of copper. Electric vehicles, renewable energy infrastructure such as wind turbines and solar panels, and the huge data centres required for the roll-out of artificial intelligence, all require large amounts of the red metal.

AI and data centres are expected to consume around 500,000 tonnes of copper a year by 2030, a big increase on previous years¹.

These new sources of demand build on already high requirements from other infrastructure projects, especially in developing countries such as China and India. Copper is a key component in commercial and residential property, as well as traditional power grids and transport networks.

What’s the supply response to higher demand?

At the same time as demand is rising, supply has been constrained. The market is expected to face a deficit of millions of tonnes a year within 15 years².

Mining operations have been disrupted by strikes (in Chile) and accidents (in Indonesia).

Due to higher demand, miners are being forced to process lower-grade copper. Not only does this lead to lower yields, it increases costs and has a negative environmental impact.

Bringing new mines on stream can take many years. On average, it can take as much as 18 years from discovery to production³. This means there can be an extended mismatch between increasing demand and the arrival of new supply to meet it.

Tariff fears

In addition to the usual supply and demand balance, there is a policy factor at play too. Last year, the US implemented tariffs on the import of semi-finished copper products like pipes and wires. There were some exceptions for raw copper and refined products such as cathodes and anodes, to protect domestic manufacturers.

However, refined copper remains under threat of a phased import duty starting at the beginning of 2027, with a possible further extension in 2028. These measures are uncertain, pending a Department of Commerce review in June 2026⁴.

The uncertainty around the future price of copper products has led to price volatility as traders have front-loaded imports to the US. A big gap has opened up between prices in the US market (Comex) and in London (London Metal Exchange), leading to the highest US copper inventory levels for more than 20 years⁵.

Where next for the copper price?

Following the sharp rise in the copper price in 2025, the outlook for 2026 is uncertain.

The consensus forecast range is between $10,000 and $12,500 a tonne, suggesting that copper may have already enjoyed its run, in the short term at least. JP Morgan forecasts an average price in 2026 of around $12,000. Goldman Sachs looks for an average of $11,400⁶.

As copper becomes more expensive, manufacturers seek alternatives. There has been a shift from copper to aluminium in some sectors like consumer electronics and other industrial applications.

Another downside risk could be a cooling in the global economy or persistent weakness in China’s property sector.

Beyond 2026, the outlook remains positive. Goldman Sachs has a long-term price target of $15,000 a tonne by 2035. This is driven by the fundamental challenge of bringing new supply on stream.

How can I invest in copper?

You can gain an exposure to the copper price in a variety of ways.

A simple way to get a direct exposure to the copper price is via a copper exchange traded fund (ETF or ETC). These are simple to buy and sell, offer a pure exposure to the price and give you no company-specific risk. However, one downside of investing this way is that copper ETCs often do not hold stocks of copper directly but invest via derivative contracts in the futures markets.

This can mean that the price of the funds does not track the copper price exactly and it can increase the cost of trading as investments are rolled forward from expiring to new contracts. This can make them inappropriate for non-specialists.

Another way of gaining an exposure to copper is indirectly via the shares of mining companies, which will have varying degrees of exposure to copper as well as other minerals. Some of these companies are familiar names, such as: BHP, Rio Tinto, Glencore, Anglo American and Antofagasta - all listed on the London stock exchange.

Investing via these shares offers some pros and some cons. Advantages include a magnified upside if the copper price rises. You could also benefit from dividend income. Even if the copper price falls back a little bit from its recent highs, these companies will still enjoy higher margins compared to when the price was significantly lower.

Downsides include company specific risks due to political, labour market and geographical factors. Also, you should note that share prices don’t always move in line with the price of the materials these companies mine as they are also impacted by broader equity market factors.

Investors looking to invest via mining companies can diversify their risk by investing in broad-based funds or ETFs. These can help you manage company-specific risks and gain regional diversification. Again, funds are exposed to broader equity market risks, even if the copper price holds up.

Examples include the BlackRock Natural Resources Fund or the BlackRock World Mining Fund. There is also an investment trust variant of this fund, the BlackRock World Mining Trust.

Finally, investors might consider a thematic fund that offers some copper exposure. One example is the Fidelity Funds Transition Materials Fund.

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Past performance is not a reliable indicator of future returns
Source: LSEG, from 31.12.20 to 31.12.25 in local currency.

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