Yes - and mounting evidence suggests this transformation is already underway. Copper’s importance in the global economy has evolved far beyond traditional industrial use. It is now a strategic resource underpinning the energy transition and the expansion of AI-driven technologies. 

Prices are trading close to $11,000 per tonne on the London Metal Exchange (LME) - up roughly 27% since January 2025 - fuelled by the rapid growth of AI data centres, electric vehicles (EVs), and renewable infrastructure.

With supply still struggling to meet demand, analysts argue that copper could soon play a pivotal role in the 21st century, similar to the one oil played in the 20th, powering everything from global energy grids to data servers.

Key takeaways

• Copper prices remain elevated, supported by strong industrial and technological demand.
  
• Supply issues in Chile and Peru, combined with declining ore quality, are tightening the global market.
  
• Institutional investment has transformed copper from a cyclical commodity into a strategic financial asset.
  
• JPMorgan projects copper at $12,000 per tonne by early 2026, while Morgan Stanley expects deficits to deepen through 2029.
  
• Trade tensions and cautious central bank policy may cause short-term volatility, but the long-term outlook remains strongly bullish.
  

Copper’s supply shortage meets surging demand

Copper’s ongoing rally is underpinned by fundamentals rather than speculation. Global production continues to face bottlenecks, with approximately 6% of the total supply currently offline due to labor strikes, adverse weather, and infrastructure constraints across key South American producers.

Chile and Peru, which supply nearly 40% of the world's copper, are facing increasing pressure due to operational delays, logistics challenges, and aging smelters. Furthermore, new deposits yield far lower ore grades - typically 0.3–0.8% compared with 2–5% in previous decades - forcing miners to process greater volumes for the same output, which in turn inflates both costs and emissions.

With mine development now taking seven to eighteen years, supply responses remain painfully slow. Morgan Stanley forecasts a 590,000-tonne deficit in 2026, widening to 1.1 million tonnes by 2029 - the most significant shortage in more than two decades.

Copper demand revolution: AI, EVs, and clean energy

Copper’s demand growth is increasingly driven by technological sectors, not just construction or manufacturing.

AI data centres are now a major source of new demand. According to the U.S. Department of Energy and the Lawrence Berkeley National Laboratory, these facilities could consume 6.7% to 12% of total U.S. electricity by 2028, up from 4.4% in 2023. Every expansion in computing capacity requires vast amounts of copper for cabling, power delivery, and cooling systems.

Electric vehicles (EVs) add another structural pillar of demand. Each EV contains about 40–50 kilograms of copper, roughly four times more than a conventional petrol vehicle. As the global automotive sector electrifies, the demand for copper in supply chains continues to grow.

The renewables industry further compounds this effect. A single offshore wind turbine of 2–3 megawatts uses 5–7 tonnes of copper, woven into generator coils, wiring, and power systems. With continued grid modernisation and battery storage development, copper intensity across the energy transition is set to multiply.

Together, these forces are driving what analysts call a “super demand cycle”, linking copper’s future directly to electrification, decarbonisation, and digitalisation.

Copper’s institutional demand: Industrial metal to strategic asset

Copper’s market character has evolved. Once a measure of industrial health, it is now viewed as a financial hedge and strategic holding.

Trading volumes on the London Metal Exchange (LME) and copper-linked ETFs have risen sharply through 2025 as institutional capital flows into the metal. Pension funds and sovereign wealth funds are treating copper as a long-term inflation hedge and a cornerstone of clean-energy exposure.

This shift has created a self-reinforcing price cycle - higher prices attract more capital inflows, which further tighten the market.

On Deriv MT5, traders can track copper (XCU/USD) using advanced charting tools, while Deriv’s commodities indices offer a broader view of industrial and energy-linked price movements, which often correlate with trends in metals such as copper. These instruments allow traders to diversify exposure to global commodity cycles.

Copper tariffs, policy, and Fed caution

Despite copper’s strong fundamentals, policy and monetary conditions continue to influence short-term movements.

The Trump administration’s shifting tariff stance on refined copper created significant volatility earlier this year. Prices spiked on the CME after tariff rumours, diverging from the LME benchmark, before retreating once refined copper was exempted.

The 2026 tariff review looms large as a potential flashpoint for renewed volatility. BCA Research’s Roukaya Ibrahim notes that “the lingering possibility of tariffs on refined copper will continue to impact the market,” maintaining a premium for U.S. copper contracts.

At the same time, the Federal Reserve’s cautious stance on rate cuts has subdued speculative flows, although the impact remains largely short-term. The deeper driver of price direction - supply deficits and structural demand - remains firmly intact.

Copper investment outlook: Path towards $12,000 and beyond

JPMorgan Chase expects copper to reach $12,000 per tonne by early 2026, roughly 11% above current prices. The bullish case rests on:

• Expanding global investment in renewable energy, AI infrastructure, and EV production.
  
• Limited near-term supply response from existing operations.
  
• Long mine development cycles restricting new capacity.
  
• Growing institutional participation in commodities markets.
  

Morgan Stanley anticipates copper’s worst supply deficit in 22 years, while Goldman Sachs calls it “the most compelling long-term opportunity in industrial metals”.

If these projections hold, copper could establish a durable floor above $10,000 per tonne, even if short-term corrections occur - marking the beginning of a sustained revaluation phase for the metal.

Copper technical analysis

At the time of writing, Copper (XCU/USD) is trading close to 10,850, fluctuating between support at 10,470 and resistance around 11,100. A breakout above 11,100 could signal a continuation of the bullish trend, while a drop below 10,470 might trigger further selling pressure. The next key support sits near 9,840.

The RSI stands around 57, indicating a neutral bias, while the MACD shows waning momentum - suggesting consolidation before a possible breakout.

Before trading, you can use the Deriv trading calculator to estimate potential profits, losses, and margin requirements for copper and other commodities. To strengthen your trading strategy, explore Deriv’s comprehensive commodity trading guides - ideal for traders aiming to understand correlations and market setups.

Copper’s short-term volatility vs long-term conviction

Even as copper’s long-term trajectory remains positive, near-term uncertainty persists. China’s property market remains sluggish, and tighter financial conditions could temper speculative activity.

Still, most analysts view any dips towards the $9,000–$9,500 range as buying opportunities, especially for funds seeking to position ahead of a potential 2026 breakout. For many, copper’s structural fundamentals - rising demand and limited supply - outweigh cyclical risks.