Despite the seemingly intractable stalemate between the United States and Iran, traders have joined a broader rally in risk assets, propelling copper prices toward a potential record closing high. At the time of writing, copper futures on the London Metal Exchange (LME) were up 0.17% at $13,589 per metric ton, having earlier risen above $13,600 during the session. Reports indicate Iran has rejected a U.S. proposal, viewing acceptance as capitulation to what it deems excessive demands from U.S. President Trump. Iran has reportedly demanded war reparations from the U.S. and recognition of its sovereignty over the Strait of Hormuz. Iranian officials also emphasized the necessity of ending sanctions and unfreezing the country's assets. An informed source stated that Iran has formally submitted its response to the latest U.S. proposal aimed at ending the conflict to Pakistani mediators. Iran's response focuses on ending the war and addressing maritime security in the Persian Gulf and the Strait of Hormuz. On May 10, President Trump posted on his social media platform Truth Social that he had just read the response from Iran's so-called "representatives," stating he did not like it and that it was "completely unacceptable."
Nevertheless, the upward momentum in risk assets that began last week continued into Monday. Various metals, including copper, rose alongside Asian stock markets, signaling that investors are not overly concerned about a severe escalation of Middle East tensions. Analysts note that the market has moved past the initial impact of the U.S.-Iran conflict, with copper now trading on its own independent trend, driven primarily by factors such as supply tightness and declining inventories in China.
**Structural Bull Market Anticipated Amid Supply-Demand Mismatch**
For copper, prices initially fell following the outbreak of conflict in the Middle East due to concerns over supply chain disruptions and potential economic slowdown. However, as signs of easing tensions emerged, copper prices have steadily recovered over the past month.
On the demand side, copper is widely used in various sectors, including electric vehicle batteries and data centers. Amid the global surge in artificial intelligence (AI) computing infrastructure build-out, data centers are becoming a veritable "new copper mine." This traditional industrial metal, with its irreplaceable conductive and thermal properties, is a core material supporting the development of the AI industry. A Morgan Stanley report forecasts that global copper consumption by data centers will increase to 740,000 metric tons by 2026, contributing 0.6 percentage points to global copper demand growth. By 2027, data center copper consumption is expected to reach 1 million metric tons (2.8% of total demand), further rising to 1.3 million metric tons (3.3%) by 2028, representing a compound annual growth rate of 40%.
On the supply side, the Middle East situation has also cast a shadow over the global copper supply outlook. Sulfuric acid, a critical raw material and the "lifeline" for hydrometallurgical copper processing, faces supply disruptions due to the regional tensions. Data shows that global sulfur production in 2025 is approximately 84 million metric tons, with Saudi Arabia, the UAE, Qatar, Iran, and Kuwait collectively accounting for about 24%. Sulfur is a byproduct of oil and gas production. The conflict has disrupted shipping through the Strait of Hormuz and damaged some oil and gas facilities, making a full short-term recovery difficult. For major copper producers like Chile and the Democratic Republic of Congo, the sulfuric acid supply gap could theoretically impact up to 8% of global mined copper supply.
A recent report from Jefferies corroborates the严峻 reality on the supply side. Based on disclosed first-quarter production data (covering a sample representing 39% of global supply), total output fell by 4.9% year-over-year and 6.4% quarter-over-quarter. Operational challenges at giants like Codelco, Freeport, and Ivanhoe Mines continue to weigh on production.
Furthermore, a J.P. Morgan report notes that Chinese copper inventories are not only continuing to decline but are being drawn down at a pace significantly faster than seasonal norms. Concurrently, the Yangshan copper premium has remained at a low level around $70 per metric ton. However, it has not weakened further following the rebound in LME copper prices, indicating that Chinese buyers are still actively purchasing despite high prices.
Jefferies estimates that global total copper demand will reach 30.93 million metric tons by 2030, with a compound annual growth rate of 2.1% from 2025 to 2030. Electric vehicles lead with a growth rate of 9.6%, while data centers and renewable energy (wind + solar, excluding grid) are also projected to grow at 6.1% and 6.7%, respectively. Supply, however, is struggling to keep pace. Global copper supply in 2030 is forecasted at only 30.09 million metric tons, implying a deficit of approximately 840,000 metric tons. Based on this gap, Jefferies' long-term price benchmark suggests copper could reach $6.50 per pound, or $14,330 per metric ton, by 2030.
Jefferies states plainly, "Even in a world with global GDP growth of just 2%, the copper market will face a significant supply-demand deficit over the next 12 months and beyond." This indicates that the core driver of the current copper price rally is not short-term euphoria fueled by macro sentiment, but a tangible, "physical shortage" on the supply side. The copper market may be moving away from its historical cyclical pattern of "three years up, two years down" and is more likely entering a period of supply-demand mismatch that could persist for several years.