Copper prices reached record levels this year, surpassing 14,500 dollars per ton in January 2026, after crossing 12,000 dollars per ton for the first time at the end of 2025. According to the International Energy Agency (IEA), the price increase has been driven by short-term supply disruptions and tariff uncertainties, as well as long-term factors – primarily strong demand resulting from the electrification of the energy system and the development of artificial intelligence (AI), alongside challenges in opening new mines. Lower interest rates, a weaker dollar, and greater investor interest in physical assets have further amplified the price growth.
Although high prices may appear favorable for producers, pressure is increasingly shifting to the copper refining sector. The rapid expansion of smelting capacities in China is creating imbalances in the middle of the supply chain and increasing risks to market stability.
Demand for copper in the coming years could rise sharply due to the power grid, electric vehicles, construction, data centers, and other sectors. However, the IEA warns that the copper market could face a supply deficit of around 30 percent by 2035. Copper content in mines has declined by 40 percent since 1991, while the discovery of new deposits has dropped sharply – of all deposits found over the past 35 years, only five percent were discovered in the last decade. Additional pressure comes from the fact that it typically takes about 17 years from discovery to production start for a new mine, and many large projects today experience delays and cost overruns.
More:
- The energy transition will lead to a sharp increase in copper demand
- ECA Warns: EU at Risk Due to Shortage of Critical Raw Materials for the Green Transition
While high copper prices seem advantageous, smelters are not earning enough. Processing charges (TC/RC) have fallen to record lows, in some contracts even to zero, creating risks for the midstream of the supply chain. Some smelters still profit from by-products – gold, silver, and sulfuric acid – but their prices are volatile, making revenue uncertain.
The IEA explains that different types of smelters have varying resilience. For example, integrated smelters linked to mines better withstand low charges as they have their own concentrate and lower costs. In contrast, independent smelters that purchase concentrate on the market are most vulnerable to falling TC/RC and concentrate shortages.
Moreover, China’s growing influence in copper refining creates a strategic vulnerability. Today, China produces about 50 percent of the world’s refined copper, and further market concentration could threaten the supply to critical sectors, including energy, transport, AI, and defense. If TC/RC remain low and by-product prices fall, many smelters outside China could become unprofitable, further strengthening China’s share in global copper refining.
The IEA report notes that the global copper industry needs diversification and coordination between mines and smelters, while governments should monitor the situation and take measures to ensure stable and secure copper production for future energy and technological needs.
Energy portal
