Copper on the verge of a new record

As prices in the global copper market approach historic highs once again, a search for a clear balance between supply-side tightness and a strong dollar has come to the fore. On the morning of September 23, three-month copper on the London Metal Exchange traded at approximately 14,770 dollars per ton. This price is just below the record of 14,875 dollars seen in September.

Copper recorded one of its longest winning streaks in about a year and a half, rising for six consecutive trading days through September 22. While the US futures market tested levels above 6.90 dollars per pound the previous day, the impact of profit-taking was observed in the September 23 sessions. Nevertheless, the fact that prices remain near record levels indicates that supply concerns remain strong in the market.

PHYSICAL SUPPLY TIGHTENS IN CHINA

One of the main factors supporting prices is the contraction in the Chinese physical market. As the available copper supply in Shanghai decreases, spot premiums are being pushed upward, while the reluctance of some sellers to provide products at low prices and the tendency to stockpile before the holiday period have increased the tightness in the market.

The fact that spot copper premiums in northern China saw increases of hundreds of yuan per ton in a single day revealed the pressure of physical demand on refined metal supply. While the entry of imported copper into the Chinese market is expected to increase, it is assessed that the current amount is not at a level that will completely resolve the tightness in the short term.

The tightness is not limited to the amount of refined copper in warehouses. Pressure is also mounting in the mine and concentrate market, which is the first link in copper production. The decline in global copper mine production in the first half of 2026 has made it difficult for refineries to procure raw materials. The more pronounced drop in concentrate production is also affecting pricing for the coming months of the supply chain.

Disruptions in major producing regions such as Chile, Indonesia, and the Democratic Republic of the Congo have made the global supply outlook more fragile. The fact that the fees charged by copper smelters in China to process ore have fallen to record lows also stands out as an indicator of the pressure regarding raw material availability.

A NEW ENGINE IN DEMAND: DATA CENTERS

Another topic supporting copper prices is the long-term demand outlook. The renewal of electrical grids, renewable energy investments, electric vehicles, and data centers are increasing copper usage. Data center capacity, which is growing especially with artificial intelligence investments, creates a need for intensive copper not only in servers but also in grid connections, transformers, power distribution, and cooling infrastructure.

Stockpiling ahead of potential new tariffs in the US is also exacerbating regional imbalances. The redirection of copper to US warehouses is leading to a decrease in the amount of available metal in other regions, creating additional support for prices.

However, there is a strong counter-factor limiting the rise: the dollar. On September 23, the dollar index hovered near its highest levels in about two months. Assessments that inflationary pressures in the US have not completely disappeared and expectations that a new interest rate hike could come from the Fed are among the factors supporting the dollar.

The appreciation of the dollar makes copper, which is priced in dollars, expensive for buyers using other currencies. Therefore, two fundamental forces are facing off in the market in the short term: while physical supply tightness and long-term demand are pushing prices up, a strong dollar and high interest rate expectations are limiting the speed of the rally.

The first critical level ahead of the market is being watched as the 14,875 dollar record seen in September. If this level is exceeded, 15,000 dollars could become a psychological threshold. However, the permanent direction of prices will depend on how quickly physical supply in China eases and to what extent problems in global mine production are resolved.

The rise in copper is also being closely watched in terms of Turkey. The fact that copper, which is a key input in the cable, electrical equipment, energy infrastructure, electronics, machinery, automotive, and construction sectors, remains expensive may reflect as pressure on the raw material costs and final product prices of industrial companies.