Copper: ATH*

Government bond yields are not the only ones reaching new highs. The red metal has also recently moved above its January peaks, trading at more than $14,000 per tonne. Copper, often referred to by Anglo-Saxon investors as Doctor Copper because of its ability to take the pulse of the economy, has naturally reacted to the latest PMI** releases as well as to announcements of Chinese stimulus measures. But beyond these cyclical factors, the metal also lies at the heart of the trade and technology wars currently unfolding. Against this backdrop, a closer look at long-term dynamics appears warranted.

It is now widely accepted that copper sits at the crossroads of several regime shifts: energy, technology and geopolitics. While the energy and geopolitical transitions have been reinforced by the conflict in the Middle East and the surge in hydrocarbon prices, the perceived benefits associated with the rise of AI have suddenly been called into question by the appeal for moderation from Anthropic’s CEO.

As a reminder, for every $100 of AI capex, $15 is allocated to network equipment and $20 to energy-related infrastructure in the broadest sense. Unsurprisingly, both segments are highly copper-intensive given the metal’s excellent electrical conductivity. A slowdown in capital investment would therefore alter the medium-term supply-demand balance. However, an analysis of hyperscalers’ off-balance-sheet commitments makes this scenario appear unlikely: these seven major US technology companies have signed data-centre leases worth $900 billion. Add to this the rapid success of Meta’s personal agent, Muse, and competitive intensity clearly remains elevated across the sector, providing little support for the idea of an imminent slowdown.

Against this structural backdrop, supply dynamics remain stubbornly unchanged due mainly to structural factors such as declining ore grades, regulatory and environmental constraints, and rising investment costs***. More specifically, an analysis of production figures from the leading mining companies, which account for two-thirds of global ore supply, shows a 3.5% decline in output in the first half of 2026 compared with H1 2025. By region, Chile is experiencing the greatest production difficulties, with output down 6% over the same period, and as much as 7% when including July, which was heavily affected by adverse weather conditions. As if that were not enough, the recycled copper market is also showing signs of weakness: secondary copper wire production has contracted by 50% year on year.

The geopolitical dimension has taken a new turn since the US administration announced that it was considering tariffs on refined copper under Section 232. Market participants reacted swiftly, with a massive shift in inventories from the London warehouses of the LME****, the main copper trading venue, to the US Comex. As a result, inventories have risen from 200 kt in July 2025 to approximately 700 kt today, creating a price divergence between the two exchanges.

It is legitimate to question the effectiveness of such a measure: given production lead times*****, it would not increase US mine output in the short term. A supply agreement with an allied country would therefore have a greater impact. If economic rationality prevails, either no tariffs or the introduction of exemptions should be the more likely outcome. If one of these scenarios materialises, part of the accumulated inventories would likely reverse course, mechanically affecting the copper price on the LME.

But beyond short-term volatility, investors should focus on the underlying message: the United States rightly considers copper to be a critical commodity and, in this context, intends to strengthen the security of its supply even at the expense of pure cost optimisation. This strategic dimension gives copper a new form of value, beyond the purely economic implications of the supply-demand deficit, and fully supports its role within a diversified portfolio.

*All-time high;
**Purchasing Managers’ Index, with the index at 53.1 in the euro area and 58.4 in the United States in September;
***2.5x over the past 15 years;
****London Metal Exchange;
*****15 years between the launch of a project and its commissioning.

Pierre Pincemaille, General Secretary of Investment at DNCA. This article was finalised in October 2nd, 2026.

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