Copper prices are testing an ascending support trendline dating back to April 2026 as global mine supply fell 1.1% in the first half of the year, signaling the first annual production contraction in the metal since 2017.
Supply Outages and Squeezed Smelter Margins
Major operational disruptions at Grasberg in Indonesia and Kamoa-Kakula in Congo removed approximately 600,000 tonnes of anticipated 2026 copper output, according to data from Sprott. The lost production represents roughly 2.5% of global mine supply. Revised forecasts from Morgan Stanley project full-year mine output to remain flat or decline slightly.
The shortage remains concentrated in raw ore rather than refined metal. In an extreme example of the raw material bottleneck, Antofagasta sold ore from its Centinela mine at a treatment charge of minus $310 per tonne, effectively paying buyers to process the material. Meanwhile, International Copper Study Group (ICSG) data reveals a 131,000-tonne refined copper surplus during the first half of 2026, as smelters relied heavily on scrap metal.
Long-term supply additions remain constrained, with an S&P Global study highlighting an average 17-year timeline to bring a new mine discovery into production. By 2040, S&P Global projects global demand will reach 42 million tonnes, leaving a structural deficit of 10 million tonnes.
AI Demand and Technical Price Levels
Industrial consumption from artificial intelligence data centers continues to escalate. Industrial Info Resources estimates a 1-gigawatt AI campus requires up to 50,000 tonnes of copper. Although copper accounts for less than 0.5% of a data center budget, procurement delays for copper-heavy transformers and electrical cabling present operational risks.
Technically, copper is retesting its ascending trendline for the fifth time, after holding firm during tests in June, July, September, and early October. Price remains capped beneath horizontal resistance near $6.70 per pound, with a breakout targeting the September record high of $6.95 per pound. A downside break below support could push prices toward the 0.382 Fibonacci retracement level near $6.31 per pound. The Relative Strength Index (RSI) currently sits neutral near 50.
Copper has also diverged from crypto assets. While copper is up 33% year-over-year, Bitcoin trades near $81,700, approximately 25% lower than its prior highs while Bitcoin holds $80,000 demand zone. Concurrently, COMEX warehouse inventories surged to a record near 700,000 tonnes in September as traders front-run a proposed 15% tariff on refined imports set for 2027.
- Global copper mine supply declined 1.1% in H1 2026 following 600,000 tonnes in outages at Grasberg and Kamoa-Kakula.
- Antofagasta recorded negative treatment charges of minus $310 per tonne for Centinela ore.
- 1-gigawatt AI data centers require up to 50,000 tonnes of copper, intensifying hardware hardware competition.
- COMEX copper inventories hit a record near 700,000 tonnes ahead of potential 2027 tariffs.
Why It Matters
The growing squeeze in copper ore highlights a fundamental friction between physical resource constraints and rapid technological expansion. As AI infrastructure builders and crypto miners compete for identical electrical components like transformers, physical supply bottlenecks could delay mega-project deployments even when capital is abundant. If copper breaks down below its April support trendline, it will signal whether macro traders view physical raw material shortages as secondary to broader industrial demand headwinds.
