Copper has created a massive buzz in the commodity market towards the end of 2025 and the beginning of 2026. Prices on the London Metal Exchange (LME) have hit record levels, while markets in the US and Asia are also witnessing a strong rally in the red metal. Along with gold and silver, industrial metals like copper and aluminium have firmly entered investors’ radar.
The year 2025 proved to be a historic one for copper, with prices surpassing records set over the past several decades. Analysts are calling this the biggest annual rally since 2009. Let’s understand why this matters not just for commodity traders, but also for common investors and consumers.
What’s Happening?
A look at recent data highlights the seriousness of the situation. Copper prices on the London Metal Exchange (LME) have crossed the $12,000 per tonne mark, a new all-time high. Meanwhile, Indian futures have moved above Rs 1,240/kg. So far in 2025, copper has risen by over 35%, marking the sharpest single-year jump since 2009.
Overall, the LME three-month contract gained nearly 41% in 2025 and is heading towards its strongest year since 2009, when prices surged more than 140% following the global financial crisis. At the same time, copper prices in the New York market have also climbed over 40% since the start of 2025.
Huge Demand from AI and Data Centres
The biggest structural driver behind this historic rally is the rapid expansion of Artificial Intelligence (AI) and data centres. The digital revolution we are witnessing is incomplete without copper. AI-driven data centres require significantly more power and advanced cooling systems compared to traditional facilities, making copper indispensable.
Data suggests that a conventional data centre typically uses around 5,000 to 15,000 tonnes of copper. In contrast, ‘hyperscale’ data centres that support AI operations operate on an entirely different scale.
Running a hyperscale data centre may require up to 50,000 tonnes of copper. This stark difference explains why a sudden shortage of the metal is being felt across markets. Additionally, the global push towards electric vehicles (EVs) and renewable energy is further boosting demand, as these sectors consume multiple times more copper than traditional internal combustion engines.
Impact of Supply Disruptions and Tariffs
While demand is soaring, supply has faced significant setbacks. In 2025, several accidents and operational challenges disrupted output at some of the world’s largest copper mines. Events such as stalled operations at Indonesia’s Grasberg mine and a tunnel collapse at Chile’s El Teniente mine impacted the supply of raw materials.
Adding to this, US trade policies have further intensified market pressure. The announcement of a 50% tariff on semi-finished copper imports by US President Donald Trump sparked panic among American buyers. To avoid potential cost escalation, US companies began aggressively stockpiling copper even before the tariffs came into force. This led to price arbitrage between COMEX and LME, tightening global supply even further.
What Does This Mean for Investors?
The impact of this historic copper rally is clearly visible in stock markets and investor portfolios. The Metal Index, which has been on a steady upward trajectory, has crossed its all-time high and is trading above 11,400. Shares of copper-producing companies have seen a sharp surge. Hindustan Copper has moved close to its all time high, while NALCO and other metal stocks have also witnessed strong rallies.
For investors, the story is not limited to copper alone. A broader bullish trend is emerging across the commodity space. This signals that both industrial and precious metals may be heading towards a ‘monster rally’, opening up new earning opportunities, while also raising concerns around stretched valuations.
What’s Next?
According to Goldman Sachs, the strength in industrial metal prices is being driven by a combination of supply disruptions, policy-related changes, and sustained global investment. Based on these factors, the brokerage has indicated that average copper prices could remain elevated through the first half of 2026. This suggests that the current surge is not merely short-term, but rooted in long-term structural trends.
As reported by The Economic Times, as this rally spreads from metals to broader industrial commodities, its impact is likely to reach common consumers as well. Many everyday products could become costlier, as high metal prices increasingly get embedded into production costs. While the overall outlook remains positive, the possibility of price volatility in 2026 cannot be ruled out. Factors such as tariff policies, mine recoveries, shifts in China’s demand, or a stronger dollar could influence the future direction of this rally.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
