US copper prices are expected to remain volatile in 2026 due to multiple market factors in flux, including Chinese demand, copper supply and artificial intelligence (AI) sector demand.
US president Donald Trump's tariff threats in early February 2025 widened the premium of copper traded on the Chicago Mercantile Exchange (CME) in July to $1.30/lb over copper on the London Metal Exchange (LME), a record-wide spread between the two primary exchanges.
US contracts are primarily settled based on the CME, the spot contract for which has had only an average premium of 2.3¢/lb over the LME since 2005.
The rapid expansion of that premium prompted the relocation of swathes of copper cathodes to the US. CME warehouse totals rose to over 453,000t, a record high compared to the next highest level of nearly 360,000t set in January 2003, with additional cathodes held in unregistered US locations.
Outright CME copper prices were also volatile in 2025, with 44 recorded days where prices swung up or down by at least 10¢/lb. The market recorded several standout examples of this, including when CME prices rose by 66¢/lb on 8 July and declined by $1.24/lb on 31 July, both coinciding with market moves before or following tariff changes.
In the latter case, Trump decided not to apply a tariff to copper cathodes and high-grade copper scrap on 30 July. The US secretary of commerce will give the president an update on the domestic copper market by June 2026, ahead of a proposed 15pc tariff slated to kick off in January 2027. The tariffs are then scheduled to rise to 30pc from January 2028.
US copper prices also climbed during 2025 on the back of interest rate cuts and an increase in demand for copper from AI and green energy sectors.
Macroeconomic outlook
Market participants surveyed by Argus were bullish for 2026 over Chinese demand, tariffs, US Federal Reserve interest rate decisions, a softer US dollar and increased demand from the growth of AI.
Suppliers and consumers widely attributed AI-related data center construction for the biggest uptick in US copper consumption in 2025.
Although signs point to a leveling off in that spending, China plans to compete with the US in the AI race, which would boost its own copper demand. US seasonally adjusted annual spending on data centers rose to $41.4bn through August, up by 26pc from a year earlier, according to US Census Bureau data, but the rate of increase in that spending has eased since June.
Copper market participants expect that as the US Fed adjusts rates down to support the US economy, the dollar will weaken, which in turn drives up copper prices.
Supply and price outlook
US market participants are split on whether the copper market will slide into a supply deficit in 2026 or within a few years.
All market participants forecast an approaching supply deficit based heavily on a lack of new mines being commissioned and slipping output from South America, traditionally the largest producing region.
Record-high US inventories are likely locked-in, sources said, as holders of volumes in US warehouses aim to close their contracts on the CME to capture prior margins. That leads many to expect additional production abroad will be required to meet global demand for the near term.
Market participants have widely forecast a strong first half of 2026 for global copper prices, chiefly on the back of insufficient mine output and an expected weakening of the dollar.
Goldman Sachs expects copper prices will average $5.17/lb in 2026 under its base case, compared to the $4.82/lb average for 2025. Despite supply concerns, Goldman expects only a small market surplus for 2026, capping the price with no shortage until 2029.
During the first three quarters of 2025, the copper market saw a 94,000t surplus, narrowing from a 310,000t surplus in the same period of 2024, according to data from the International Copper Study Group in November.
Other observers expect bigger price gains, with Citigroup putting copper above $5.90/lb by the second quarter of 2026. Meanwhile, Bank of America forecasts the average copper price at $5.13/lb for 2026, while TD Cowen raised its forecast in October to $5.25/lb from $4.40/lb previously.
Not every signal points to higher prices, and many expected gains could be dampened by a slowing global economy and lingering supplies.
Despite recent production disruptions due to major mine accidents in Chile and Indonesia and other producers decreasing their forecasts, some participants expressed skepticism about sharp price increases in 2026. They credited ample near-term stocks, especially in the US, that would likely cover even strong increases in domestic demand from AI or even traditional sectors like real estate.
