Copper on the London Metal Exchange traded above $14,100 per metric tonne on Thursday, May 14, up more than 1% on the session and closing in on the all-time record of $14,527.50 set on January 29, 2026, per LME data cited by Economic Times. On COMEX, copper futures hit $6.60 per pound on Wednesday, May 13, a fresh all-time high per Trading Economics. Since Iran closed the Strait of Hormuz in late February, copper has gained 9%. Year-to-date gains stand at approximately 15%, with the metal up 42.78% over the past 12 months.
This is not a war spike. Traders increasingly believe this is structural, a metal priced for decades as an industrial input now being repriced as a strategic asset sitting at the intersection of AI infrastructure, energy transition, and a geopolitical order that has made supply chains feel genuinely fragile.
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The Acid Problem — The Story Bigger Than AI
The loudest headline driving copper is AI demand. The more consequential story right now is sulfuric acid.
China’s May-to-December sulfuric acid export ban removes roughly 3 million tonnes from the seaborne market, per European Business Magazine. Combined with Hormuz shipping disruptions cutting Middle East sulfur flows, Wood Mackenzie has stated plainly that the binding constraint on copper output is no longer geology, it is acid availability, refining charges, trade policy, and fiscal risk.
J.P. Morgan analysts estimate China’s acid export halt threatens to squeeze approximately 15% of global copper production that depends on the chemical for extraction, specifically for solvent-extraction-electrowinning (SX-EW) operations, which account for roughly a quarter of all refined copper output globally.
Nearly half of the world’s seaborne sulfuric acid supply originates from the Middle East, where sulfur, a petroleum refining byproduct, is produced by Iran, Saudi Arabia, and the UAE. When Hormuz disruptions proved more prolonged than markets anticipated, the supply chain fractured. Sulfur prices broke through $1,200 per metric tonne, a record high confirmed in Mosaic’s latest quarterly report.
Chilean Q1 2026 copper production was already down 6% year-on-year before the acid crunch hit. Codelco, the world’s largest copper producer, has reported a 5% rise in production costs since March, attributable directly to the Middle East sulfur shock and China’s export restrictions, per European Business Magazine.
Grasberg Is Running at Half Capacity
The acid problem compounds a mine supply story that was already in trouble before February 28.
Freeport-McMoRan’s Grasberg mine in Indonesia, the world’s second-largest copper operation, is currently producing between 40% and 50% of nameplate capacity following a mudflow event in September 2025, per a Forbes/ts2.tech report on May 13. Freeport officially reiterated a late-2027 full-production target on Monday, but the operational reality and the guidance are not the same number.
An estimated 270,000 metric tonnes of copper output will be lost from Grasberg in 2026 alone, per Recycling Product News. Ivanhoe Mines separately cut its 2026 guidance for the Kamoa-Kakula complex in the DRC to 380,000–420,000 metric tonnes, down sharply from 520,000–580,000 metric tonnes in 2025, following flooding disruptions.
What stood out from J.P. Morgan’s note, and what most commodity coverage misses, is the inventory paradox. Global visible copper inventory now sits at nearly 1.5 million tonnes, up 540,000 metric tonnes in 2026, per Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan. On paper, that is a surplus. In practice, it is not. The surplus sits in the wrong places, in the wrong forms, and on the wrong continents, mostly in US warehouses built up under Section 232 tariff protection.
What clears the physical market is refined cathode at the smelter gate, and smelter economics are currently governed by acid availability and treatment charges at historic extremes, per European Business Magazine. The International Copper Study Group has flipped its 2026 balance to a 96,000-tonne surplus against a previously forecast 150,000-tonne deficit. The market is ignoring it because the number is geographically useless.
AI Demand — 500,000 Tonnes by 2030, Defence Not Yet Priced In
AI data centres are projected to consume 500,000 metric tonnes of copper annually by 2030, driven by mega-projects including the $500 billion OpenAI Stargate initiative, with each hyperscale site requiring up to 50,000 tonnes, per Oregon Group analysis. IEA Executive Director Fatih Birol has warned of a 30% copper supply shortfall by 2035 if current trends continue, “It’s time to sound the alarm,” he said.
Citigroup analysts argue that energy transition and defence demand will keep copper resilient even if Hormuz stays closed for an extended stretch. Defence spending as a copper demand driver is the least-discussed angle in current commodity research. Military electronics, shipbuilding, weapons systems, and infrastructure rebuilding in conflict zones all consume copper at rates not yet fully captured in standard demand models.
On the supply response, Freeport-McMoRan’s $7.5 billion El Abra expansion in Chile will add 300,000 metric tonnes per year when complete, per INN. KoBold Metals’ Mingomba project, which started development in March 2026, will add another 300,000 metric tonnes.
Neither comes online before the early 2030s. The demand curve and the supply response are on fundamentally different timelines, and no project currently under construction closes the gap before 2027 at the earliest.
Where Prices Go From Here — Bull Case, Bear Case, Trigger
Technically, copper has broken above key resistance at $13,000–$13,500 per tonne and is now testing the $14,500 record zone. Immediate resistance sits at the January 29 all-time high of $14,527.50 on the LME. Support has shifted up to $13,200–$13,500.
J.P. Morgan’s bear case puts copper at $11,100–$11,200 per tonne if macro conditions deteriorate, specifically if Brent oil holds above $110 per barrel for the rest of 2026, which the bank estimates would strip 1.4 percentage points from global copper demand growth.
Copper has historically troughed 25% below its peak during major macroeconomic shocks, per J.P. Morgan’s historical analysis, applied to the January $14,527 record, that implies a potential trough near $10,895. The ICSG and J.P. Morgan project 2026 deficits of 150,000 and 330,000 tonnes respectively, both pointing toward $15,000 as a feasible upside target if supply constraints persist.
The trigger that resolves this trade is the Hormuz situation, not a data centre announcement. A ceasefire that reopens acid flows eases the smelter crunch and removes the geopolitical premium from a metal that was already structurally expensive before the war started. J.P. Morgan’s floor for that scenario is $11,100 per tonne. The bulls need a sustained close above $14,527 to confirm the next leg. Until one of those two numbers breaks, copper trades entirely on war headlines.
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FAQ
Q: Why is copper at record highs when global inventory is near 1.5 million tonnes, a surplus level?
Because the surplus is geographically and structurally inaccessible where it matters. J.P. Morgan’s Gregory Shearer confirmed global visible copper inventory rose 540,000 metric tonnes in 2026, mostly concentrated in US warehouses under Section 232 tariff protection. The refined cathode that smelters in Chile, Peru, and Indonesia need is not available at the smelter gate. The binding constraint is sulfuric acid for SX-EW extraction, China’s export ban removes 3 million tonnes from the seaborne market (European Business Magazine), and Hormuz disruptions have cut Middle East sulfur flows simultaneously. The ICSG 96,000-tonne surplus exists on spreadsheets. It does not exist where copper is actually produced.
Q: How much copper does the AI boom actually need, and when does the demand hit?
AI data centres are projected to consume 500,000 metric tonnes of copper annually by 2030, with each hyperscale site requiring up to 50,000 tonnes, per Oregon Group analysis. The IEA forecasts a 30% copper supply shortfall by 2035. The two new major supply projects, Freeport’s El Abra expansion ($7.5 billion, 300,000 MT/year) and KoBold’s Mingomba (300,000 MT/year, started March 2026), together add 600,000 tonnes of annual capacity, but neither comes online before the early 2030s. Demand arrives in 2027–2030. Supply responds in 2031–2033. That gap is what the market is pricing.
Q: What is the downside risk and what price level signals the rally is breaking down?
J.P. Morgan’s bear case is $11,100–$11,200 per tonne if Brent oil sustains above $110 per barrel, stripping 1.4 percentage points from global copper demand growth. The historical trough-to-peak in major macro shocks is 25%, per J.P. Morgan, which from the $14,527 January record implies a floor near $10,895 in a severe scenario. Technical support on the current move sits at $13,200–$13,500 per tonne on the LME. A confirmed close below $13,000 with volume would signal the geopolitical premium is unwinding faster than the structural supply deficit can hold prices. On the upside, ICSG and J.P. Morgan’s deficit projections of 150,000–330,000 tonnes for 2026 underpin $15,000 as the bull target if Hormuz stays closed and acid flows remain disrupted through Q3.
