Copper Surges to Record High: Which Copper Stocks Are Worth Watching?

TradingKey - Copper prices recently broke all-time highs to reach $14,533, with a cumulative gain of 17% over the past year.

The backdrop to this record-setting rally is a long-term narrative that copper bulls have told for years: aging major global mines struggle to keep up with demand growth from AI data centers, renewable energy, and power grid construction. The gains over the past year were underpinned precisely by this long-term supply-demand mismatch.

Why Copper Prices Hit an All-Time High

What is truly driving prices to new highs are short-term factors. Markets continue to bet that U.S. President Donald Trump will expand tariffs to include refined copper imports. A U.S. Commerce Department recommendation report to the White House on whether to impose tariffs on refined copper is now about two months overdue, leaving the tariff suspense unresolved and instead continuing to provide support for prices.

Even more noteworthy is the structure of copper inventories: While total global visible inventories are currently not low, they are heavily concentrated in the U.S.

Copper in the LME's global delivery network continues to diminish, draining short-term available supply, squeezing short positions, and ultimately driving prices to record highs. Copper prices have hit new highs even in an environment where demand is far from robust; macro headwinds such as the situation in Iran and rising U.S. borrowing costs have for now failed to stop the rally.

How Tariff Trades Pushed Hundreds of Thousands of Tons of Copper to the US

The most direct driver of this rally has been the high premium in the New York market. Ever since Trump first formally proposed tariffs on copper in February last year, Comex copper futures have consistently maintained a premium over the LME, opening a massive arbitrage window for traders, with hundreds of thousands of tons of copper shipped to the U.S. this year.

Latest data from the U.S. Department of Commerce shows that, driven by front-loading ahead of the tariffs, U.S. imports of refined copper and copper alloys reached a record high of 225,094 metric tons in July. According to trade data tracking firm Trade Data Monitor, this was the highest monthly level recorded since 1990, up 78% month-on-month and 8% year-on-year.

Large-scale cross-market transfers directly drained LME inventories: last month, inventories supporting the delivery of LME copper contracts fell to extremely low levels, triggering a clear squeeze. Although subsequent new arrivals relieved some pressure, spot prices still maintained a deep premium over three-month futures. This term structure, known as "backwardation," is a classic signal that physical demand is outstripping supply.

Copper Supply Stagnation: A Stronger Support Than Tariffs

If tariff expectations are the market catalyst, production stagnation provides an even firmer fundamental driver. The latest data from the International Copper Study Group (ICSG) show that global copper mine output decreased by 1.1% year-over-year in the first half of this year, with major producers such as Codelco and Freeport-McMoRan recording double-digit declines.

As the world's largest copper-producing country, Chile's plight is the most representative: its second-quarter copper output dropped to the lowest level in 19 years, and the full-year output forecast was revised down by 2.6%. Codelco warned that even modest production targets might be difficult to achieve this year. Despite a sharp rally in copper prices, Chile's copper shipments in August still fell to their lowest point in over a year.

Institutional forecasts are collectively turning bearish on supply. Morgan Stanley, which initially predicted an increase in copper supply this year, has now revised its expectation downward to "roughly flat or slightly down," implying that global copper mine production could see its first annual decline since 2017. High copper prices typically incentivize miners to boost production, but declining ore grades, frequent operational accidents, project delays, and extreme weather are posing real-world obstacles to output expansion.

Driven by strong copper prices, copper stocks have accumulated gains of about 15% year-to-date. Right now, investors are betting that stagnant copper production growth will push prices of the industrial metal even higher.

ANZ Bank noted in its latest research report that, driven jointly by changes in U.S. tariff policies, mining supply challenges, and global energy transition demand, copper prices still possess strong upside potential and could further break through the $15,000 mark by early 2027.

Copper Stocks to Watch: Four Upstream Miners

Driven by the expansion of AI data centers, power infrastructure demand, and expectations of supply shortages, volatility in copper concept stocks has intensified significantly. The reason for focusing on the upstream sector is that the primary products of copper mining companies are copper concentrate and refined copper, allowing rising copper prices to translate directly into profits. Meanwhile, industry concentration in the upstream sector is higher than in the midstream and downstream segments. Against the backdrop of a widening supply-demand deficit in 2026, miners with stable production capacity possess the strongest bargaining power.

Looking at them individually: Freeport-McMoRan (FCX) is one of the world's major producers of copper, gold, and molybdenum, with core assets including large mines in Indonesia, Peru, and Arizona, U.S., and is regarded as one of the targets most directly linked to copper prices; Southern Copper (SCCO) is one of the world's largest integrated copper producers, possessing the world's largest copper reserves, with operations spanning Peru, Mexico, and several other countries; BHP (BHP) is a diversified mining group whose core businesses include iron ore and copper, operating Escondida, the world's largest copper mine; Rio Tinto (RIO) ranks among the top three global mining companies, with operations involving the extraction and processing of various metals and minerals such as aluminum, copper, iron ore, and diamonds.

It should be noted that even leading miners have generally faced operational challenges this year, as evidenced by the ongoing sluggishness in shipments from Chile; copper stocks rise and fall in tandem with copper prices, and their volatility is often even more intense than that of copper prices themselves.