26-12-2025

Executive Summary


Copper prices have surged to record highs, driven by a powerful convergence of strong demand linked to electrification and infrastructure, persistent supply constraints, low global inventories, and heightened geopolitical and policy-related risks. Recent developments, including the Democratic Republic of Congo’s suspension of artisanal copper and cobalt processing and growing concerns over potential U.S. tariffs, have further tightened market sentiment. This report provides a comprehensive assessment of the global copper market, examining supply-side challenges, demand drivers, price performance, investor behaviour, and the outlook for international and Indian markets.

26-12-2025

Market Highlights

• Copper prices have risen sharply in international markets, marking their strongest annual performance since 2009.
  
  
• On the London Metal Exchange (LME), copper crossed the $12,000 per tonnemark for the first time.
  
  
• COMEX copper futures climbed to around $5.80 per pound, reflecting tight global supply conditions and robust economic data from the United States.
  
  
• Year-to-date, copper prices are up more than 40%, underscoring the strength and persistence of the current rally.

Copper has increasingly been viewed not merely as a cyclical industrial metal, but as a strategic asset tied to the global energy transition and long-term economic transformation.

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Supply-Side Developments and Constraints

Congo’s Crackdown on Artisanal Mining

The Democratic Republic of Congo (DRC), the world’s largest cobalt producer and a key copper supplier, has suspended artisanal copper and cobalt processing as part of a broader anti-corruption and transparency drive.

• The suspension aims to curb illegal exports, improve traceability, and align mineral production with international environmental, social, and governance (ESG) standards.
  
  
• A government-appointed commission will verify the legality and origin of minerals processed by artisanal operators.
  
  

Market Implications:

• While the immediate impact on global copper supply remains unclear, the move adds uncertainty to an already tight supply environment.
  
  
• Increased scrutiny and compliance costs could temporarily disrupt supply flows, supporting higher prices.

Structural Supply Challenges

• New copper mine development is capital-intensive and typically requires several years before production begins.
  
  
• Major producing regions, including Chile and Indonesia, have faced operational disruptions, regulatory hurdles, and environmental constraints.
  
  
• Years of underinvestment have limited the industry’s ability to respond quickly to rising demand.

As a result, supply growth has consistently lagged demand growth, reinforcing structural tightness in the copper market.

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Demand Drivers: Electrification, Infrastructure and China

Energy Transition and Electrification

The global shift toward electrification is the single most important driver of copper demand.

• Electric vehicles (EVs) require significantly more copper than internal combustion engine vehicles.
  
  
• Renewable energy projects, charging infrastructure, data centres, and power grid upgrades are highly copper-intensive.
  
  
• Governments worldwide are accelerating investments in clean energy and strategic infrastructure, translating long-term projections into immediate physical demand.




China’s Role in the Copper Market

• China remains the world’s largest copper consumer, making its economic trajectory critical for global prices.
  
  
• Recent data indicate stabilisation in Chinese manufacturing activity, supporting demand for industrial metals.
  
  
• Any policy stimulus focused on infrastructure or manufacturing typically results in a rapid positive response in copper prices.

Despite concerns over broader economic growth, China’s central role in the energy transition and infrastructure build-out continues to underpin copper demand.

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China’s Plan to Monitor Copper & Aluminum Projects 2026–2030:

Curbing Overcapacity: China aims to prevent disorderly expansion in copper, zinc, and lead smelting, which in the past led to excess capacity, weak profitability, and market instability. New capacity additions will be tightly controlled.

Focus on High-End Products: Under the 2025–2026 industrial plan, the government is shifting emphasis toward ultra-high-purity metals, advanced alloys, and functional materials, moving away from basic, high-emission production.

Improving Resource Efficiency: Policies encourage green mining technologies, better utilisation of low-grade ores, and the development of metal recycling bases to increase recovery from scrap and waste metals.

Strategic Project Planning: New alumina and copper projects will be scientifically planned to avoid duplicate and low-value construction, ensuring capital is deployed efficiently and supports long-term demand.

Environmental and Carbon Goals: Stricter oversight supports China’s carbon-neutrality objectives, particularly as metals production especially aluminium is highly energy-intensive.

Overall Impact:

China is transitioning from rapid capacity expansion to a controlled, quality-driven growth model in copper and alumina. Through strict monitoring and capacity discipline up to 2030, the policy is likely to support market stability, improve industry margins, and reinforce long-term supply discipline.

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Inventory Levels and Market Tightness

• Copper inventories across global exchanges and storage facilities remain historically low.
  
  
• Thin stockpiles provide little buffer against supply disruptions or sudden demand surges.
  
  
• Low inventories amplify price reactions to news, contributing to sharper rallies and increased volatility.

This tight inventory environment has been a critical factor behind copper’s rapid ascent to record levels.

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LME Copper– Positioning Snapshot

·         Commercial Undertakings dominate positions, holding the largest share of open interest, mainly on the short side (45.33%), indicating strong hedging activity by producers and industrial users at elevated prices.

Investment firms and credit institutions hold nearly 47% of total open interest, with long and short positions fairly balanced, reflecting active speculative participation rather than a one-sided bullish bet.

·         Investment funds show a net-long bias, with long positions (16.9%) significantly higher than shorts (5.65%), suggesting continued bullish sentiment among funds despite record prices.

·         Other financial institutions have relatively smaller exposure, indicating limited participation from this segment compared to funds and commercial players.

·         Weekly changes show a reduction in total positions, especially on the short side among commercial undertakings, pointing to position trimming and profit-booking after the rally.

·         Low participation from compliance-driven operators (ETS) indicates that carbon-related hedging activity remains minimal in copper at this stage.

Overall Interpretation:
The positioning data suggests a market where funds remain bullish, while commercial players are actively hedging at high price levels, reinforcing the view of a tight but increasingly cautious copper market near record highs.

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Outlook from Major Institutions

• Goldman Sachs expects copper prices to ease modestly in 2026 from current record highs but remain well-supported by structural demand.
  
  
• The bank forecasts LME copper prices to trade in a $10,000–$11,000 per tonne range in 2026, with an average of $10,710 per tonne in the first half.
  
  
• Over the longer term, Goldman Sachs projects copper prices could reach $15,000 per tonne by 2035, driven by grid expansion, power infrastructure, AI-related demand, and defence spending.

Despite near-term volatility, institutional forecasts remain constructive on copper’s long-term outlook.

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India Copper Market: Size and Growth Outlook

According to Grand View Research, India’s copper market is projected to reach US$ 38.3 billion by 2030, growing at a CAGR of 7.2% from 2025 to 2030.

The Centre for Social and Economic Progress (CSEP) identifies copper as a cornerstone of India’s energy transition and industrial growth.

Copper demand in conventional sectors such as construction, electricity, and manufacturing is projected to reach 3.24 million tonnes by FY2030.

Demand from the energy transition sector, including EVs and renewable energy, is expected to rise sharply to 274,000 tonnes by FY2030.

India’s twin goals of rapid economic expansion and decarbonisation are set to significantly intensify copper consumption over the coming years.

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TECHNICAL OUTLOOK

Copper CFDs are in a bullish trend. A break above $6 could trigger a new rally, with targets between $6.50 and $7. On any pullback, consider buying near $5.60, with a stop-loss below $5.30 based on closing basis The upside target on a rebound could reach $6+.


Copper’s trend remains bullish. Any dip toward 1200 may offer a buying opportunity, with a stop-loss on a closing basis below 1150. Upside targets are seen in the 1300–1400 range. The copper market continues to be structurally strong, supported by tight supply conditions.

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Conclusion

Copper is experiencing a historic rally driven by tight supply, strong demand from electrification and infrastructure, and low inventories. Supply constraints, including disruptions in key producing countries, and rising demand from EVs, renewables, and China, support sustained price strength. While short-term volatility is likely, long-term fundamentals remain robust, with global and Indian markets poised for significant growth. Copper’s strategic role in the energy transition makes it both a critical industrial metal and a valuable investment asset.

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