Why are copper prices rallying to record highs; will the rally continue? What investors need to know

International copper prices are back in the trend and so are copper players in India, shares of Hindustan Copper, Hindalco and Vedanta rose as much as 3% on Tuesday morning as global copper prices soaring for the sixth consecutive day.

The rally in copper prices is a combination of multiple factors aligning at the same time, creating high-demand and lower supply kind of scenario in the metal markets. The copper futures traded in the US surged for the sixth consecutive session above $6.7 per pound rate as global output falls for the first time since 2017. On the Long Metal Exchange, copper prices made record high of $14,870 per tonne in earlier this month, before plunging 4% on the same day.

In the previous six sessions, copper prices have recouped all the losses to trade nearly 0.5% higher at $14,755 levels on Tuesday afternoon. Global strategists and market participants expect the correction was a retracement of a broader rally in metal prices.

Here are key factors that drove copper prices near to fresh peaks.

Supply constraint

2026 started on a disappointing note for copper supply as operational incidents at Grasberg in Indonesia and Kamoa Kakula mines in Congo, removed 600,000 tonnes of production from total output at the start of the year. The global mined output for copper plunged over 1% YoY in the first half of 2026, despite soaring rally in prices. Chile, which represents 24.5% of the total mined output saw a 6.6% YoY drop in output in H1 2026, creating supply constraint in global markets. The supply constraints led to over $500 per tonne premium in LME futures over spot prices, further indicating supply constraints in the markets.

Chilean copper commission predicts that the total copper mined output is likely to face decline in 2026 despite the strong rally in prices.

Robust demand

Meanwhile, the demand for copper is pacing in the opposite direction of supply. China, which is a major consumer of copper and other metals, is witnessing robust physical demand for copper. The physical demand copper prices are now trading in premium over the futures prices in China. The Yangshan premium, which is often considered a preferred gauge to ascertain price of physical commodities, hit the highest level since 2022. Additionally, the premium paid over Shanghai Futures exchange also to highest level since 2023.

Copper supply to US rises dramatically

Amid the impending threat of tariffs, the copper supply to the US has increased exponentially in the recent past. According to Sprott Asset Management, which is focused in precious metals and critical metal investment strategies, highlighted the copper cathode imports to the US jumped to a record 223,000 tonnes in July, compared to 37,000 to 80,000 tonnes of import prior to 2024. The sharp increase in imports is driven impending tariffs on refined copper, which currently stands exempted from the tariff list. The comex inventories also increased over 7 fold from February 2025 to August 2026, further eroding the supply from global markets.

Stocks in focus

Shares of copper miners and product makers like Hindustan Copper, Hindalco have witnessed strong rally in the previous year, led by improved realisation in the output. On the other hand, shares of consumers like Polycab India, RR Kabel, KEI Industries and Finolex Cables have witnessed margin compression and indicate towards price hike if the raw material inflation persists for longer.

Outlook

The volatility is expected to continue in the metal prices as tariff infused anxiety and demand-supply mismatch could drive prices higher. Meanwhile, the reducing ore grade are also likely to keep the supply constraint limited in FY27. On the flipside, increasing power demand due to AI data centres globally and rising physical demand in China is likely tokeep the demand pull inflation in copper prices intact.