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Copper prices surge on China stimulus and supply woes
Copper prices approached record levels on January 12, 2026, fueled by a weaker US dollar and anticipation of fresh Chinese policies to spur consumer spending. This industrial metal, vital for global electrification, saw three-month contracts on the London Metal Exchange climb 1.9% to $12,964 per metric ton, while Shanghai Futures Exchange prices rose 2.91% to 103,200 yuan per metric ton. The benchmark had hit an all-time high of $13,387.50 per ton just days earlier on January 6.
Beijing's aggressive moves to bolster domestic demand aligned perfectly with the rally. At the National Commerce Work Conference on January 10-11, Commerce Minister Wang Wentao detailed eight key initiatives for 2026, such as consumer subsidies, trade-in schemes, and the "Buy in China" drive. China's cabinet, under Premier Li Qiang, convened that Friday to advance fiscal and financial measures aimed at lifting household consumption. With an initial 62.5 billion yuan ($8.9 billion) earmarked for trade-in subsidies, the country as the top global copper buyer stands to drive demand for wiring in appliances, vehicles, and beyond.
Supply-side pressures intensified the upward momentum. The International Copper Study Group anticipates a 150,000 metric ton deficit in 2026, while Morgan Stanley predicts the tightest shortfall in over two decades at around 590,000 tonnes. Chile's Codelco, responsible for nearly 30% of world output, grappled with production setbacks and slapped record $350 per ton premiums on 2026 contracts over LME prices, up from $89 for 2025. Disruptions plagued key sites, including seismic issues and flooding at Ivanhoe Mines' Kakula operation in May, a collapse at Codelco's El Teniente mine in July, and a mudslide at Freeport-McMoRan's Grasberg in September.
Longer-term tailwinds from AI and electrification promise to reshape the market. A January 7 S&P Global report forecasts copper demand doubling to 42 million metric tons yearly by 2040, propelled by data centers, defense outlays, and green energy transitions. Hyperscale AI facilities from Microsoft, Google, Amazon, and Meta could each devour up to 50,000 tons of copper for power and networking gear far exceeding traditional centers' 5,000-15,000 tons. Goldman Sachs lifted its first-half 2026 price outlook to $12,750 per ton, factoring in a scarcity premium, though it tempered expectations with a $11,200 target for the year's end.
The price action boosted mining equities, with Freeport-McMoRan up 4.2% that Friday. Rio Tinto and Glencore, meanwhile, reignited merger discussions on January 9, potentially forging a behemoth valued near $200 billion.
