Copper prices have experienced significant volatility in recent trading sessions, with LME copper falling 0.5% to $13,290 per metric tonne on Friday due to ongoing Iran-US tensions and geopolitical uncertainties. According to Energy News, this follows earlier gains when copper prices reached an all-time high of $14,500 per metric tonne in early February 2026 before correcting sharply by mid-March. The current price action reflects the market's sensitivity to geopolitical developments, with LME copper stocks remaining near a 12-year-high at nearly 400,000 tonnes, providing some support despite the recent decline. Market participants continue to navigate between structural demand drivers and geopolitical risks that have created trading ranges between $12,700–$13,000 globally.
The primary driver of recent price volatility has been the continuing closure of the Strait of Hormuz and lack of progress in US-Iran peace talks, as reported by Energy News. Israel and Lebanon extended the ceasefire by three weeks, but President Trump stated he wasn't in a hurry to reach an agreement with Iran, maintaining market uncertainty. Ole Hansen, head commodity strategy at Saxo Bank, noted that while the threat of military escalation is reduced for the moment, the severity and disruption continue to increase every day. The LMEX Index, comprising six major base metals, has gained 11% this year despite recent pullbacks, highlighting the underlying strength of the base metals complex. LME copper is stuck between two competing forces: the pressure of a weaker economy on demand and the threat of disruptions due to shortages of sulfuric acid.
The memory market crisis has reached critical levels as contract DRAM prices from the big three spiked by 80%-90% from Q4 2025 to Q1 2026, with analysts foreseeing another double-digit to 60% increase in 2026. According to Sourceability, memory now constitutes as much as 15%-20% for mid-range smartphones, creating significant margin pressure for manufacturers. IDC expects 2026 DRAM and NAND supply growth to come in well below historical norms, at 16% and 17% year-over-year respectively, while TrendForce data indicates that demand for DRAM chips currently exceeds supply by 10%. The timeline for capacity expansion further complicates the picture, with chipmakers expected to max out memory production capacity by end-2026, and Micron's Idaho plant isn't expected to come online until 2027, meaning relief is at minimum two years away.
Several key factors continue to drive the current price rally despite recent volatility. The boom in artificial intelligence infrastructure, particularly hyperscale data centres, has created unprecedented demand for copper in power distribution and cooling systems. As reported by The Economic Times, the global push toward electrification and renewable energy integration has intensified the need for copper in grid modernisation projects. Additionally, electric vehicles require up to four times more copper than conventional cars, amplifying automotive demand, while AI data centres are projected to consume nearly 475,000 tonnes in 2026. These structural demand drivers continue to support long-term price momentum, with copper's trajectory carrying significant macroeconomic weight as rising prices elevate input costs across manufacturing, housing, automotive, and technology sectors.
The current supply-demand scenario points to a significant deficit, with global refined copper shortfalls estimated at 330,000–400,000 tonnes in 2026. According to The Economic Times, smelting bottlenecks, particularly in China, have capped refined output, while regional imbalances have led to acute shortages and price premiums in certain markets. Recycling has provided some relief, but the secondary supply remains insufficient to bridge the gap. The International Copper Study Group announced on Thursday that the global refined market for copper is expected to turn into a surplus by 2026, though this outlook remains subject to ongoing market developments. The analysis notes that delays in new mining projects due to environmental clearances and financing challenges have worsened the imbalance, though unless significant investment flows into exploration and production, the deficit could widen further.
Despite near-term volatility, the long-term outlook remains structurally bullish according to market analysis. According to The Economic Times, demand from AI infrastructure, electric vehicles, renewable energy, and global electrification initiatives is poised to sustain elevated prices. However, market participants at the Financial Times Commodities Global Summit warned of risks to demand in the event of a prolonged conflict, with Mercuria's top metals analyst noting that the global aluminum market is already experiencing "black swans" in supply due to disruptions caused by the conflict. The key resistance to the upside is at $13,525 per ton, a level that has been a constant source of challenges since early February. While prices are expected to consolidate around $12,700–$13,000 in the near term, the fundamental drivers of structural demand continue to support the commodity's long-term value proposition, though with all these uncertainties, it's probably the reason we've traded sideways more or less for the past two weeks.
