Smelts Like Green Spirit

Supply, Demand, and Applications of Copper

Copper is used in many industries, the main users being: construction (26%), consumer and

general products (23%), infrastructure, power and telecom (17%), transport (13%) and industrial equipment (12%), electronics, and electrical. Copper is supplied to fabricators in the form of cathode, wire rod, billet, cake (slab), or ingot. These materials are then processed through various methods such as extrusion, drawing, rolling, forging, melting, electrolysis, or atomization to create wire, rod, tube, sheet, plate, strip, castings, powder, and other shapes. The fabricators who produce these shapes are known as the first users of copper.

In the electrical industries, copper is the best non-precious metal conductor and as such, it is used for wiring. It is also used in construction due to its resistance, ductility and resistance to corrosion. It is a key component of energy-efficient generators, motors, transformers, and renewable energy production systems. Copper is also used in electronics, specifically in chips and processors. The usage of copper allows electronics to perform faster while also avoiding overheating. In industrial machinery and equipment, copper and its alloys are highly appreciated due to their ability to be cast with higher precision and durability, being used heavily for gears and turbine blades. Its resistance to corrosion makes it incredibly useful in shipbuilding, being used in any part of a ship that is exposed to seawater. Copper is also used for cookware, brassware, keys and also as coinage (because it lasts much longer than other metals and it is non-precious). In transportation, copper is used in cars as well, particularly in EVs, with the average BEV having 83 kg of copper.

To assess supply and demand, we will first give an overview of the size of the copper market.

During January-August 2025, the world’s copper mining production sat at 15,322 thousand metric tons, an increase of 2.9% compared to the same months in the previous year. The mining capacity utilization has remained around 80% over the last four years, albeit with a slight decline from the 2022 peak of 82.9%. The growth in mined copper was 9.28% from 2021 to 2024.

However, the largest production increases came from refined copper, specifically secondary refined copper, which rose by 5% increase in the same time periods. Moreover, there is a 13.42% increase in secondary refined copper production from 2021 to 2024. The increase in primary refined copper production in the same period is 9.36%.

The current usage of refined copper is around the same as the total production of refined copper, but it is growing at a faster rate (6.0% vs 4.1%). We can see that growth in mining and primary refining is around the same values, but we see significant growth in the secondary refined market, showing that future demand growth can not only be met by new copper, but by scrap copper too.

Figure 1 - (ICSF, 2025)

By geography, the differences arise between producers of copper ore and refined ore. The 10 largest countries by copper ore production, then by refined copper production and lastly by copper reserves are: Chile, Democratic Republic of Congo, Peru, China, Indonesia, United States of America, Russia, Australia, and Kazakhstan. There is a huge concentration of copper mining in South America, specifically Chile and Peru, which combined account for approximately 34.3% of the world’s newly mined copper. This may have huge implications on the rivalry between China and the United States, as China is by far the largest producer of refined copper in the world. On the other hand, according to “The World Copper Factbook 2024”, a serious issue regards the declining ore grades, particularly in markets like Chile or the United States, which causes higher energy costs and higher usage of desalinated water. Chile must resort to water desalination to sustain the copper mines’ demand, which has a huge negative environmental impact on the country.

            The main challenge regarding the concentration of refined copper production is the Chinese monopoly, as it holds around 45% of the world’s production. In fact, China has developed beyond developed in copper-intensive industries such as construction, consumer goods and infrastructure. And, although China produces almost half of the world’s refined copper, it is still a net importer of refined copper, importing 4.04 million tons of refined copper in 2024, with the DRC emerging as China’s main external supplier.

Figure 2 – Largest Copper Reserves by Country

Not always, huge copper reserves translate into huge copper mining production, as in Australia. Since most of the resources are found in arid areas of the Australian Outback, far away from water sources, the extraction would be expensive and energy intensive. Once again, the biggest challenge regarding the supply of newly mined copper proves to be tied to environmental factors and energy costs. However, even though copper will require more and more energy to produce, one of its main usages is linked to the production of electronic devices that consume less energy. Therefore, copper’s role in the world economy will be crucial, especially for the new energy-intensive industries, like Artificial Intelligence.

Copper on the Markets

Figure 3 -  LME copper price, $/metric ton

As of early November 2025, copper spot prices are hovering around US$10,900 - 11,000 per tonne (which approximates to US$4.98 per lb). This places the metal approximately 12% higher year-on-year. It indicates that the market continues to discount structural tightness in supply-demand fundamentals as prices remain slightly below the May 2024 record of the London Metal Exchange (LME) benchmark’s three-month contract reaching record highs around US $11 460/t (which approximates to US$5.20/lb). It was buoyed by supply disruptions. Notably, at Grasberg (Indonesia) and the ongoing closure of Cobre Panamá have removed an estimated 500,000 tonnes of copper supply from the global balance in 2025 (Crux Investor, 2025).

These events have significantly tightened concentrate availability and contributed to backwardation in the LME cash-to-three-month spreads. Therefore, one of the defining features of the copper market in 2024-2025 has been the divergence between COMEX and LME contracts. Between January and February 2025, COMEX copper prices surged by about 15% which far outpaced the 6% gains on the LME (SMM Analysis, 2025). The COMEX-LME spread widened to nearly US$950 per tonne, after which it partially retraced. By mid-2025, analysts observed premia of 11-27% as tariff expectations and regional imbalances reshaped trade flows (Kpler Research, 2025).

Simultaneously, copper demand is undergoing a structural expansion. Artificial Intelligence and data-centre construction have emerged as new high-intensity copper consumers. Estimates suggest that AI-driven data infrastructure could require approximately 400,000 tonnes of copper annually by the end of the decade (Carbon Credits, 2025; BHP Insights, 2025).

The Tariff Battle and the Restrictions on Rare Earths

US Tariffs:

On 30 June 2025, the US government imposed a 50% ad valorem tariff on imported semi-finished copper products and derivatives, under a Section 232 trade-security investigation, effective from 1 August 2025 (EY Tax Alert, 2025). Notably, raw copper feedstocks were exempted, limiting direct impact on upstream producers. However, it did distort downstream pricing and trade flows. Firstly, the tariff announcement amplified the COMEX-LME spread volatility. Moreover, at pre-implementation, importers front-loaded shipments to bypass the new duty, which temporarily inflated the US inventories to record levels of approximately 577 kt (Kpler 2025). Then, as the tariff took effect, refined copper imports fell, tightening local supply and sustaining a double-digit U.S. premium over the global benchmark. Furthermore, LME warehouse stocks dropped by roughly 50% year-on-year due to more metal being rerouted toward the US market. US consumers faced elevated input costs, while Asian and European smelters benefited from redirected flows. In that regard, American manufacturers relying on imported semi-finished copper faced immediate margin compression. Many shifted to domestic recycling or non-tariff sources.

China’s Rare Earths Restrictions:

China’s recent export controls on rare earth elements, including critical metals like neodymium and dysprosium, have rippled through industries from electric vehicles to wind power. Beijing dominates rare earth refining and magnet production, making 94% of the world’s high-performance magnets. When China first abruptly tightened heavy rare earth exports in April, global carmakers struggled to secure magnets, with some forced to cut production. Prices for neodymium and other rare earths in Europe spiked to five-to-six times Chinese levels. In response, manufacturers are exploring magnet-free technologies that rely more on copper. Automakers like Tesla, Audi and BMW have begun engineering rare earths out of EV motors, rather opting for induction or wound-rotor designs packed with copper coils. These copper-intensive motors avoid China’s chokehold on rare earths, albeit with modest efficiency trade-offs. Similarly, wind turbine makers may reconsider direct-drive systems (which use tons of rare earth magnets) in favor of electromagnet-based generators that substitute copper wiring for scarce magnets. Each such pivot amplifies demand for copper in electric motors and energy infrastructure as a practical substitute for rare earth materials.

Figure 4 - Copper content of different EV motor technologies – induction and especially wound-rotor motors (which use no rare-earth magnets) contain significantly more copper per motor than permanent-magnet designs.

More broadly, this strategic material shift has changed copper’s role in policy and investment. S&P Global projects a refined copper supply gap of up to 10 million tonnes per year by 2035, even under aggressive recycling and new mine development scenarios. In response, the U.S. Department of Energy included copper on its Critical Materials List, citing high projected demand growth and supply-side vulnerabilities. Europe and Japan are also pursuing similar reassessments, and investment in copper-intensive infrastructure is accelerating.

Figure 5 - The U.S. Department of Energy’s Critical Materials Assessment identified copper as an emerging critical material for clean energy. In the DOE’s short-term (2020–2025) risk matrix (left), copper sat just below the “critical” threshold, but by the medium term (2025–2035, right), copper’s supply risk and importance to energy rise into the yellow “near-critical” zone.

  Geopolitically, China’s export controls function as a tool of leverage within the broader US–China trade rivalry. The rare earth embargo on Japan in 2010 and the 2023 export license requirements on gallium, graphite, and select rare earths have already highlighted how such measures can distort global markets.

Figure 6 - China’s 2010 rare earth embargo triggered an unprecedented price spike – e.g. dysprosium oxide surged from ~$90/kg in early 2009 to over $2,300/kg by mid-2011 (a 26-fold increase, see above). Copper prices, in contrast, rose only about 30–40% during the same period

While rare earth prices are highly reactive to supply constraints, spiking over 2,000% in prior episodes, copper’s deeper, more diversified market has historically muted its price volatility. Still, copper does present some risks: Chile and Peru together supply nearly one-third of mined copper, and disruptions in any major producer could trigger global price instability. Ultimately, China’s rare earth restrictions are accelerating a structural reconfiguration of materials demand. Policymakers increasingly view copper not merely as an industrial metal but as a security-relevant input critical to electrification, defence, and digital infrastructure. As decoupling trends and resource nationalism intensify, copper’s role as a hedge against concentrated supply chains makes it a focal point for the future of industrial policy and global commodity markets.

References

Cambero, F. (2024). Chile’s copper miners will need more energy, water to keep up production, Cochilco says. Reuters. 27 Jun. Available at: https://www.reuters.com/markets/commodities/chiles-copper-miners-will-need-more-energy-water-keep-up-production-cochilco-2024-06-27/

Home, A. (2025). Congo emerges as China’s strategic copper supplier. Reuters. 18 Feb. Available at: https://www.reuters.com/markets/commodities/congo-emerges-chinas-strategic-copper-supplier-andy-home-2025-02-17/

Mineral Commodity Summaries (2025). Available at: https://pubs.usgs.gov/periodicals/mcs2025/mcs2025-copper.pdf

Trading Economics (2023). Copper. Trading Economics. Available at: https://tradingeconomics.com/commodity/copper

Metal.com. (2025). COMEX Copper Prices Surge, Widening Spread with LME and Reshaping Global Trade Flows - Shanghai Metal Market. Available at: https://www.metal.com/en/newscontent/103176094

Kpler.com. (2025). Copper: emerging US shortage to widen Comex-LME spread by October | Kpler - Jul 22, 2025. Available at: https://www.kpler.com/blog/copper-emerging-us-shortage-to-widen-comex-lme-spread-by-october

EY (2025). The US imposes tariffs on copper products. Available at: https://www.ey.com/en_gl/technical/tax-alerts/us-imposes-tariffs-on-copper-products

Cruxinvestor.com. (2025). Why Copper Markets Face an Unprecedented Supply Squeeze - Article | Crux Investor. Available at: https://www.cruxinvestor.com/posts/why-copper-markets-face-an-unprecedented-supply-squeeze

Saptakee S (2025). Data Centers’ Copper Hunger: How AI is Driving a Looming Supply Crunch? Carbon Credits. Available at: https://carboncredits.com/data-centers-copper-hunger-how-ai-is-driving-a-looming-supply-crunch/

Bhp.com. (2025). Why AI tools and data centres are driving copper demand. Available at: https://www.bhp.com/news/bhp-insights/2025/01/why-ai-tools-and-data-centres-are-driving-copper-demand

International Energy Services (2024). China’s share in rare earth magnet production, 2024 – Charts – Data & Statistics - IEA. IEA. Available at: https://www.iea.org/data-and-statistics/charts/china-s-share-in-rare-earth-magnet-production-2024

S&P Global (2022). The Future of Copper Will the looming supply gap short-circuit the energy transition? Available at: https://cdn.ihsmarkit.com/www/pdf/0722/The-Future-of-Copper_Full-Report_14July2022.pdf

World Bank Commodities Price Data (The Pink Sheet). (n.d.). Available at: https://thedocs.worldbank.org/en/doc/18675f1d1639c7a34d463f59263ba0a2-0050012025/related/CMO-Pink-Sheet-October-2025.pdf

Carey, N. and Amann, C. (2023). Automakers’ drive to avoid China’s EV rare earth dominance gathers speed. Reuters. 14 Nov. Available at: https://www.reuters.com/business/autos-transportation/automakers-drive-avoid-chinas-ev-rare-earth-dominance-gathers-speed-2023-11-14/

Critical Materials Assessment. (2023). Available at: https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf

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