Copper prices have been making headlines thanks to their recent bull run, reaching a record high of $11,200/mt on the London Metal Exchange (LME) at the end of October. Why are prices rising, and could the rally continue?  

Setting the scene: A tightening copper market

The copper market has tightened significantly on the back of acute supply disruptions, sending prices soaring. In September, a fatal mudslide occurred at Grasberg in Indonesia — the world’s second largest copper mine — triggering a force majeure; the Grassberg Block Cave portion of the mine, which accounts for 70% of previously forecasted production, is expected to remain closed until the second quarter of 2026. Elsewhere, production guidance at the Quebrada Blanca copper mine in Chile has been downgraded due to operational challenges, further compounding the global shortage.  

“After essentially flat mine supply growth expected this year, our 2026 mine supply growth estimates have fallen to only around +1.4%, or about 500 kmt lower than our estimates at the beginning of the year,” said Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan.

Importantly, this tightness comes amid a dislocated copper inventory. After front-loading imports earlier this year, the U.S. sits on ample copper reserves. However, given that refined copper could eventually be subjected to tariffs under Section 232, U.S. copper prices continue to trade at a premium to the LME. “This open arbitrage not only locks this excess inventory in the U.S. for now, but it also works to still attract marginal additional imports to the U.S.,” Shearer explained.

Higher demand from China could eventually come into play, too. During previous copper rallies, domestic demand for copper fell, and Chinese smelters were incentivized to export their products instead. However, the fundamental setup looks different this time round.

“More acute supply disruptions are likely here to stay for multiple quarters at the very least, which we think limits China’s ability to fully wait out higher prices. Moreover, we are already tracking a rollover in Chinese refined copper production and there still remains significant potential that Chinese smelters find themselves short of units of copper raw material, driving a long-hypothesized reversal in refined production growth,” Shearer said. “Hence, we do think there will come a point soon where China will likely have to reluctantly increasingly buy into stronger copper prices.”

In light of these supply-demand dynamics, J.P. Morgan Global Research projects a global refined copper deficit of ~330 kmt in 2026, creating an even tighter market.

What is the forecast for copper prices?

Looking ahead, J.P. Morgan Global Research expects the rally to continue, with copper prices reaching $12,500/mt in the second quarter of 2026, ultimately averaging ~$12,075/mt for the full year.

Data center demand growth remains an upside risk to these forecasts. “The continued surge in demand for compute remains extremely topical for copper markets, even if overall demand from the sector is growing from a small base. This could translate into about 475 kmt of copper demand in data center installations in 2026, up by ~110 kmt versus this year,” Shearer noted.

In addition, higher copper prices could have fundamental consequences down the line. “Higher prices and differentials to aluminum will work to accelerate substitution trends. However, substitution is a longer-term structural process in our view — not something that can immediately unwind copper supply shortages,” Shearer observed.

“All in all, we think these unique dynamics of disjointed inventory and acute supply disruptions tightening the copper market add up to a bullish set up for copper, and are enough to push prices above $12,000/mt in the first half of 2026,” Shearer added.