A supply crisis in the copper market is rapidly approaching under multiple pressures. Mine accidents and tariff disruptions are persistently constricting supply in the short term, while the wave of electrification and explosive demand from artificial intelligence infrastructure are pushing copper towards a deeper structural shortage.

According to a research report released by S&P Global in January, the global copper supply deficit is projected to widen to 10 million tonnes by 2040. Demand is expected to surge to 42 million tonnes by then, a 50% increase from current levels. More urgently, ING predicts a refined copper shortfall of 600,000 tonnes in 2026, continuing the trend of a 200,000-tonne supply gap expected in 2025.

The tightening supply is already leaving a clear mark on prices. In 2025, the front-month copper futures contract on the COMEX recorded an annual gain of over 41%, its largest yearly increase since 2009—a year when the contract surged by 138%. So far this year, copper prices have climbed nearly 2% further.

Copper, often referred to as a barometer for the global economy, is extensively used in power grids, renewable energy systems, and electric vehicles. Concurrently, the booming artificial intelligence industry is introducing a new demand engine—data centers rely on copper throughout their construction and operation, covering power systems, cooling equipment, and networking gear.

Frequent mine accidents are causing supply shocks whose effects will linger for years. Multiple commodity experts point to production disruptions at mines as a core reason for the 2025 copper shortage, with ripple effects expected to persist for several years.

Charles Cooper, Head of Copper Research at Wood Mackenzie, stated that the industry faced numerous significant challenges last year, with the world's three largest copper mines all experiencing periods of shutdown.

Specifically, the Kamoa Kakula mine in the Democratic Republic of Congo, one of the world's top copper producers, suffered severe flooding in the first half of 2025, leading to downward revisions of its production forecasts for 2026 and 2027. The world's largest underground copper mine, Codelco's El Teniente in Chile, experienced a fatal tunnel collapse in June last year. The mine's general manager recently indicated that the incident would pressure production for the next five years. In September, a deadly mudslide at Indonesia's Grasberg mine resulted in a 35% cut to its 2026 production forecast, with operations not expected to normalize until 2027 at the earliest.

Cooper noted that while the industry's average annual mine disruption rate calculated by Wood Mackenzie is around 5%, the actual disruption level last year was significantly higher than normal. This means that a substantial amount of new copper production capacity, originally expected to fill the supply gap, has been significantly reduced and "pushed out into future years."

Meanwhile, the development cycle for new mines is lengthy—S&P Global data indicates it takes an average of 17 years from discovery to production for a copper mine, further limiting flexibility on the supply side.

Tariff disruptions are creating "artificial tightness," with ongoing uncertainty pushing risk premiums higher. Another source of pressure on supply comes from market distortions caused by tariff policies. Fears of broader tariffs have triggered large-scale hoarding in the US market.

Ewa Manthey, Commodities Strategist at ING, commented that significant volumes of copper are accumulating in US warehouses. However, this means supplies outside the US have become extremely tight, leaving the market with little capacity to absorb further supply shocks. She described this as an artificially created tightness, as substantial inventories are stuck within the US while markets elsewhere face severe shortages.

Although the US Supreme Court overturned most of a proposed broad tariff package in March, specific tariffs targeting the metals industry remain in effect. Manthey believes that continued policy uncertainty will maintain a certain "risk premium" in copper prices. She added that material already diverted to the US is unlikely to be released back to the global market, as the industry-specific tariffs are still active and the direction of trade policy remains highly unpredictable.