Copper prices remained significantly elevated throughout the second quarter of 2026, reaching new all-time highs as a complex interplay of supply disruptions and robust demand pressures intensified an already strained market. Geopolitical tensions, particularly the US-led war against Iran, exacerbated existing mine site challenges, while the relentless expansion of artificial intelligence (AI) data centers continued to drive substantial downstream electricity generation needs, fueling the demand side of the equation.
Q2 Price Performance: A New Peak for the Red Metal
The second quarter saw copper prices open near year-to-date lows before embarking on a consistent upward trajectory. On the Comex, the continuous contract began Q2 at approximately US$5.64 per pound, while three-month contracts on the London Metal Exchange (LME) were trading at US$12,434.50 per metric ton. By April 22, prices had posted significant gains, with Comex reaching US$6.12 and LME climbing to US$13,433.
After a slight dip at the end of April, momentum quickly returned in May. Copper set a new all-time high on the Comex of US$6.72 per pound on May 13. The LME mirrored this performance, with prices hitting US$14,196.50 during intraday trading. While prices have since retreated somewhat, they remained close to yearly highs, settling at US$6.13 on the Comex and US$13,371 on the LME as of June 23.
Persistent Supply Headwinds Intensify
Copper supply has faced considerable constraints since 2025, primarily due to significant shutdowns at major mine sites. Freeport-McMoRan’s Grasberg mine in Indonesia and the Kamoa-Kakula joint venture in the Democratic Republic of Congo (DRC) have both experienced disruptions. Although operations have restarted, they have not returned to full capacity.
Ruilin Wang, associate director, copper-zinc, at S&P Global Energy, noted that Grasberg is targeting 60 percent of capacity by the end of the year, pushing its timeline for full production back to 2028 due to wet ore complications. Kamoa-Kakula has also revised its guidance downward by 22.5 percent, to 290,000 to 330,000 metric tons, citing slower-than-anticipated recovery efforts.
Adding to these woes, Chile, the world’s top copper producer, has seen its production forecasts shift dramatically from a projected 3.7 percent growth to a 2 percent decline. Q1 data revealed a 9 percent decline compared to the same period last year. Wang attributed this slowdown to ongoing challenges at Chile’s Codelco, stemming from aging mines and recovery efforts at El Teniente, the world’s largest underground copper mine. Significant portions of El Teniente collapsed in August 2025 following an earthquake. Codelco executives, in a Reuters report on February 10, set production expectations at 301,000 metric tons in 2026 but anticipate a five-year timeline to ramp back to full capacity.
Geopolitical Impact: Strait of Hormuz Closure Disrupts Key Shipping Lanes
Beyond mine output, supply chain obstacles have layered on new risks. “Supply chain obstacles have now layered on top. The Strait of Hormuz closure following the US-Israel war with Iran that began on February 28 has introduced a new and compounding set of supply-side risks,” Wang stated. The most pressing concern for the market is the disrupted supply of sulfuric acid, a critical component in copper solvent extraction and electrowinning processes in Chile and the DRC.
The inability of traffic to transit the strait has led to a dramatic surge in sulfuric acid prices, reaching all-time highs of US$820 per metric ton in the Middle East and an even higher US$1,200 per metric ton in import regions like Brazil. These high sulfur prices and shipping lane closures prompted China to halt all sulfur exports in May to prioritize domestic fertilizer production.
Furthermore, the conflict has severely disrupted energy shipments and destabilized production in key areas, including Qatar’s Ras Laffan liquefied natural gas (LNG) plant, which accounts for nearly one-fifth of global LNG supply. Attacks on the plant have caused extensive damage, with QatarEnergy not expecting output to return to normal for three to five years. This has direct implications for the copper market, as the Ras Laffan common sulfur plant produces over 10,000 metric tons of sulfur daily.
Despite a memorandum of understanding signed between the US and Iran on June 17, offering a glimmer of hope for peace and the strait’s reopening, renewed attacks by Iran on June 19, including on the Ras Laffan plant, highlighted the fragility of the peace process. Wang emphasized the broad impact of the closure, affecting ‘not just Asian producers, but also South and North America, Africa,’ noting that Chile was already facing sulfuric acid supply gaps in H2 2026, and Asian wire and cable producers had experienced output declines due to bottlenecks in natural gas and insulators.
Resilient Demand Dynamics Gain Clarity
The core drivers of copper demand remain robust, albeit with a more balanced outlook. The continuous growth in AI infrastructure development continues to demand significant copper inputs for data center construction and grid expansion. “The market’s demand forecasts for copper — driven by electrification, AI infrastructure and grid expansion — are now more balanced. While estimates may have been overly optimistic in the previous years, current forecasts reflect a more rational view of medium-term demand growth into 2027 and beyond,” Wang commented.
While China’s construction sector demand has softened, its overall apparent consumption has remained strong, registering a 9 percent year-on-year increase in April, according to data supplied by JPMorgan Chase & Co. (NYSE:JPM). This was supported by warehouse inventories being destocked throughout the supply chain. JPMorgan also suggested that energy disruptions from the Middle East conflict might paradoxically boost copper demand outside China, as high energy costs could prompt more consumers to seek oil and gas alternatives.
China has been a leader in electric vehicle (EV) production, photovoltaics, and grid expansion. However, JPMorgan noted that a structural boost outside of China is likely as petrol costs and availability become more pressing concerns. Evidence of this shift is emerging, with Chinese exports of EVs and hybrids jumping 140 percent in March to 350,000 units, and battery shipments rising 16 percent above the Q4 2025 average. Similarly, searches for EVs in March increased by 25 percent.
Looking ahead, several factors will dictate copper’s trajectory for the remainder of 2026. The resolution of the US-Iran conflict and the subsequent reopening of Persian Gulf shipping routes are paramount; continued closure could worsen supply deficits and destabilize the market. Even with a full reopening, a return to normal shipping and production levels will require time. Additionally, investors await the US Secretary of Commerce Howard Lutnick’s review of Section 232 copper tariffs, expected on June 30. JPMorgan anticipates the Trump administration will implement the escalating 15 percent tariffs laid out in the original executive order, effective from July 2025, aiming to retain imports within the US and utilize excess copper in warehouses as a critical reserve.
