In late 2024, we wrote about silver. The structural case was building quietly; solar, EVs, a persistent supply deficit, and the market hadn’t caught up yet, and when it did, we saw a sharp surge in silver prices.
Copper is one more commodity whose prices have surged sharply in the last couple of years.
But not many have copper in their radar as such. And almost nobody in India is talking about it.
Dr Copper
Copper has an honorary doctorate from economists. It is called “Dr. Copper” for a reason, it’s the world’s most reliable barometer of economic growth. Its price is one of the most reliable barometers of global economic health, when demand rises, factories are humming and growth is happening. When it falls, slowdowns follow.
And copper is practically irreplaceable. It’s a physical input in everything: construction wiring, home appliances, power grids, solar farms, EVs, AI data centres, and defence systems. Over 70% of copper ends up in electrical applications. There is no substitute that works as well, as safely, or as affordably at scale.
Now here’s where the story gets interesting.
The Demand-Supply Equation
Right now, supply is roughly keeping up with demand, at ~28 million metric tons per year. That won’t last. Demand is about to accelerate sharply across four vectors simultaneously, while supply faces structural problems it cannot quickly fix.
The Demand Side: Various Forces Hitting at Once
Copper comes in many forms: wires, rods, bars, plates, sheets, strips, and tubes. It finds its way into Construction, Electronics, Transport, Power grids, Renewable energy, Electric vehicles, Defence, AI & Data Centres.
The total demand for copper is expected to rise by ~2.7% CAGR by 2040 with AI related capex the fastest growing segment.
Note: Core economic includes construction, cooling, appliances, fossil power generation, machinery and internal combustion engine (ICE) vehicles
And another force is emerging: humanoid robots. Even 1 billion units by 2040 adds 1.6 million metric tons of annual demand, bigger than India’s entire current consumption.
The Supply Side: A Chain with Many Weak Links
Before we talk about what’s going wrong, have a look at the supply chain here:
Mine → Concentrate → Smelter → Refinery → Cathode → Fabricator → End Product
Mining: Mining Copper Ore from the earth
Concentration: Ore is processed into a powder with 24–40% copper content
Smelting: Concentrate is heated to separate copper from impurities, producing blister copper (~98–99% pure)
Refining: Blister copper undergoes electrolysis to produce copper cathode — 99.99% pure
Fabrication: Cathode is shaped into wires, rods, tubes, sheets, and strips
End use: These reach EVs, solar farms, buildings, data centres, and defence systems
There are two sources of copper in this chain: primary supply (mined) and secondary supply (recycled scrap). Mining accounts for roughly two-thirds of total supply; recycling accounts for the rest.
The problem is that both are under pressure.
Mining: Ore grades are falling. Miners today dig twice as much rock for the same copper as 30 years ago. Building a new mine takes an average of 17 years from discovery to production. Two major mines recently went dark: Cobre Panamá (1.5% of global supply, shut since 2023) and Grasberg in Indonesia (world’s second-largest, hit by a mudslide in late 2025). Together, roughly 4% of global supply has simply vanished.
Smelting: Even if ore is available, it needs processing. China controls 40–50% of global smelting capacity, a single chokepoint the entire world depends on. Any disruption there ripples everywhere.
Recycling: Copper is infinitely recyclable without quality loss. But even aggressively scaling recycling covers only a third of 2040 demand. It helps but it cannot plug the gap alone.
Making Room for Copper in a Portfolio
We have a few options when it comes to getting exposure to copper. Physical copper isn’t a very practical investment option, given the substantial storage space needed to build meaningful exposure.
A Word of Caution
Note: The price above is $/Mt
From the COVID crash lows of 2020, copper has delivered roughly 150% growth, with the sharpest leg coming in the last eighteen months fuelled by a speculative buying spree as markets priced in US tariffs on refined copper imports and anticipated continued AI and grid infrastructure spending.
What we need to keep in mind is, metals can, and do, move on sentiment, tariff fears, and speculative flows which may be disconnected from logic. We saw it with gold. We saw it with silver.
A few banks like Goldman Sachs, Bank of America have given a target price for copper that is upwards of $13,500-$15,500 by 2035. From this point, the upside seems limited.
Rising copper prices is also an economic headwind. Copper is an input cost for infrastructure, construction, EVs, and electronics. When it gets expensive, everything built with it gets expensive too, feeding inflation. Higher copper prices are, in a sense, a tax on the very electrification trend driving them.
While the demand supply dynamics make a strong case for copper, the markets already seem to have priced in a lot of the positives. In my opinion, the best time to build a position in any metal is when no one is talking about it. During times when there is extreme pessimism. That’s when the structural story and the investment case aligns.
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Till the next time,
Vijay
CEO – InCred Money
