Major Economists Predict Copper Strength Amid Supply Concerns

Copper prices are trading near $6.30 per pound on Tuesday, marking an approximately 8% decline from early August highs and continuing a downward trend following its first weekly drop since June.

Economist Steve Hunka recommended maintaining a long position in copper six days ago, though this advice came just hours before the rally paused. His supply-side rationale remains unchanged, as global mine production has decreased for the first time since 2017.

Hunka published his note on September 9, when London Metal Exchange prices were setting new records. According to International Copper Study Group (ICSG) data, worldwide mine output is projected to decline by 1.1% in the first half of 2026.

The Grasberg mine operated by Freeport-McMoRan has been running at about half capacity since a fatal landslide and remains so as of now. Chile has also revised its production outlook downward for the second consecutive quarter, with ore grades deteriorating, requiring miners to move more rock to extract less copper.

Freeport-McMoRan reduced its 2026 copper production forecast from 1 billion pounds to 700 million pounds. Chile has cut its national outlook by 2.6% for two consecutive quarters.

Geological factors are compounding operational challenges, with average ore grades falling below 0.6% at several major mines—down from 1.6% in 1990. Miners now have to process more rock to extract less metal.

Despite these pressures, copper prices recently surpassed $14,600 per ton for an all-time high this month. Similar supply factors also drove recent sugar price rallies.

AI data centers are creating new demand: building one megawatt of capacity requires 60–75 tons of metal, mostly copper. Analysts estimate AI facilities alone could add around 475,000 tons of annual demand this year.

Predictions vary widely—Morgan Stanley anticipates a 600,000-ton supply deficit, JPMorgan forecasts 330,000 tons, and ICSG estimates 150,000 tons. Goldman Sachs is less confident, warning that if copper prices remain high, manufacturers may switch to aluminum.

Copper prices peaked at $6.92 on August 6 before forming a triple top pattern, falling below $6.53 and currently testing support near $6.29. Further declines could push prices toward the $5.90 level.

TradingView data shows copper is not yet oversold, with RSI around 42. If selling pressure continues, key support lies near $5.90.

The U.S. government delaying tariff decisions on refined copper imports has added further pressure, causing copper to flow back into LME warehouses.

‘Copper is leading the decline and testing recent lows with a cautious tone,’ said Neil Welsh, head of metals at Britannia Global Markets.