Copper prices have been on a volatile ride this year. The price of the red metal hit a then-high of $5.24 USD per pound on March 26, before dipping to $4.05 per pound on the back of global trade tensions.
It then more than made up this ground, reaching a new record of $5.69 per pound on July 8, following the announcement of a planned 50% tariff on copper imports to the U.S., only to fall again when it emerged the tariff would only apply to semi-finished copper products and not ore or refined copper.
In the short term, questions over the strength of demand and heightened geopolitical instability are acting as headwinds for copper. Over the longer term, the red metal could be heading for a significant mismatch between supply and demand as production decreases and demand – driven by its many uses in everything from green energy infrastructure to artificial intelligence (AI) – continues to grow.
Key Factors Behind Copper’s Robust Demand
Global demand for refined copper reached nearly 27 million tonnes (Mt) in 2024, a 3.2% rise compared to 2023, according to a report from the International Energy Agency (IEA). China continued to be the world’s largest consumer of copper and accounted for nearly 60% of consumption of refined copper in 2024, dwarfing the U.S. in second place at 6%. For much of 2025, copper demand growth in China has been running at a double-digit rate, with imports of copper concentrate reaching a record high in April, before falling back in May.
Demand for copper is driven by its multitude of uses. Copper’s high levels of conductivity, as well as its durability and affordability, mean it is used extensively in electrical grid infrastructure. Copper is also a key component of electric vehicles, solar panels and wind turbines. Other demand drivers for copper include data centers and 5G networks, which are significant consumers of electricity.
Copper is also a key component in the hardware behind AI applications. AI servers have higher power requirements than conventional data centers, leading to corresponding higher use of copper. The IEA estimates AI centers could account for between 1% and 2% of global copper demand by 2030, although it notes that copper consumption by this sector could be significantly higher depending on the pace of AI growth.
While Chinese demand for copper is expected to remain robust in the year ahead, driven by energy grid investment and the decarbonization of its economy, short-term demand from other markets could ease as a result of the uncertain economic outlook, global trade tensions and heightened geopolitical risks. Copper is often seen as a bellwether of the economy due to its use in industry, construction and transportation, meaning demand typically rises as economies grow, but falls during periods of stagnation.
China’s demand for copper is expected to continue to grow for the next decade, before starting to ease as it reaches economic maturity, leading to less construction and a slower expansion of its manufacturing sector.
Meanwhile, other countries in Asia are also showing a growing appetite for copper. India currently accounts for 3% of global demand but is expected to overtake the U.S. in the near future, reaching an estimated 10% of global consumption by 2050. Vietnam’s consumption share is expected to jump from 1% in 2024 to 6% by 2050, with demand in both markets driven by ongoing industrialization, infrastructure development and urbanization. Lower production costs in these markets could also see them take on a growing share of the manufacturing of semi-finished copper products.
As Production Slows, Supply is Tightening
The supply of copper is not expected to keep pace with growing demand. Global mined copper reached 22.8 Mt in 2024. Chile remained the largest supplier, accounting for around a quarter of global output, with the Democratic Republic of Congo taking second place, followed by Peru.
The IEA expects the global supply of mined copper to peak later this decade at around 24 Mt, before falling as ore grades decline, reserves become depleted and mines are retired.
The average grade of copper ore has declined by 40% since 1991, while the rate at which new deposits are discovered has stalled. Only 14 of the 239 new copper deposits discovered between 1990 and 2023 were discovered in the past 10 years. The situation is further exacerbated by the fact that copper production has a long lead time, taking an average of 17 years from when new deposits are discovered to the production of the metal.
The IEA predicts this decline in production amid increased demand will lead to demand outstripping supply by the end of this decade, with a supply shortfall of 30% by 2035. At this point, it estimates copper demand will reach 28.3 Mt, but supply will be only around 21.8 Mt.
China’s Role in the Supply Chain
China plays a critical role in the global copper supply chain. Although copper is mined in a number of countries, China processed 45% of the world’s copper in 2024, a feat it was able to take on after increasing its refining capacity by 83% since 2020. Its production levels dwarf the share of the second largest supplier, the Democratic Republic of Congo at 8% and third place Chile.
Japan and Korea also have developed copper refining industries but still only collectively account for around 8% of global copper refining capacity. China is expected to continue to grow its share to account for an estimated 50% of refined copper production by 2040. Indonesia, Europe and India are all also expected to increase their copper smelting capacity in the coming 10 years, but China’s economies of scale and operational expertise in this area make it difficult for other markets to compete.
U.S. Tariffs
In early July, U.S. President Donald Trump announced plans to impose a 50% tariff on imports of the metal to the U.S. starting on August 1. The news sent copper prices to an all-time high. On the eve of the tariff being imposed, it was clarified that it would only apply to 51 types of semi-finished products, and copper ore and refined copper would be excluded.
The U.S. imported 810,000 tons of refined copper in 2024, around half of the total it consumes, with Chile its largest supplier. Copper imports rose by around 50% year-on-year in the first half of 2025 in anticipation of potential tariffs, and led to a disparity between U.S. copper prices and the cost of the metal in other markets.
The announcement that copper ore and refined copper would not be subject to tariffs led to a steep drop in U.S. prices, putting them back in line with those in other markets. As a result, some of the copper stocks built up in the U.S. may now begin to be re-exported to other markets. At the same time, copper exporters are expected to redirect their supply to other major consumers, such as China and the EU, where stocks of the metal have been impacted by the U.S.’s pre-tariff buying spree.
Looking Ahead
While copper is heading for a significant mismatch between supply and demand over the long-term, it is still vulnerable to shocks, and by extension, price volatility over the short term. Deteriorating economic conditions and rising geopolitical tensions could dent demand, while the concentration of copper mining and refining leaves the metal at risk of global supply chain disruption.