Copper Holds Near $13,500 as LME Stocks Drain and ICSG Flags 150,000-Tonne Deficit

Copper ended the week of July 6-10 at $13,484.50 per metric tonne on the London Metal Exchange, up less than 1% on the week but holding within 10% of the all-time intraday high of $14,500 set in January 2026. The cash-to-three-month spread remains in a $66 contango, signaling that near-term physical supply is adequate, but the structural story beneath the surface is tightening faster than most procurement teams realize.

The visible market tightened sharply last week. LME on-warrant inventories fell 12,400 tonnes to 306,500 tonnes, while cancelled warrants — metal earmarked for withdrawal — still stand at 107,350 tonnes, roughly 35% of total registered stock. On the Shanghai Futures Exchange, copper inventories dropped 18.3% week-on-week, touching their lowest level since December 2025. The combined visible inventory draw across both exchanges exceeded 18,000 tonnes in a single week.

Behind the numbers is a supply side that is struggling to keep pace. Chilean production — still the world's largest source at roughly 27% of global mined copper — fell to 399,950 tonnes in April 2026, down from 434,490 tonnes in March. That 7.9% monthly decline reflects grade deterioration at aging mines, water scarcity in the Atacama, and project delays at Teck's Quebrada Blanca Phase 2 ramp-up. Peru, the number-two producer, saw March output rise to 238,464 tonnes from 223,263 tonnes, but that gain only partially offsets Chilean losses.

The International Copper Study Group delivered its most consequential forecast revision in two years last month, flipping its 2026 outlook from a modest surplus to a 150,000-tonne refined deficit. The ICSG now expects refined production to grow by just 0.9% in 2026, constrained by smelter bottlenecks, while demand continues to expand at roughly 2.5% annually. This is not a short-term disruption story; it is a structural supply response failure.

On the demand side, the AI infrastructure buildout is emerging as a material new source of consumption that barely existed in copper models three years ago. J.P. Morgan estimates data centers will absorb approximately 475,000 tonnes of copper in 2026, up from roughly 350,000 tonnes in 2024. BloombergNEF projects AI-powered data centers will consume an average of 400,000 tonnes annually over the next decade, peaking at 572,000 tonnes. Every hyperscale data center requires copper for power distribution, cooling systems, backup generators, and grounding — roughly 27 tonnes per megawatt of capacity. With global data center construction spending projected to exceed $280 billion in 2026, the copper intensity of the digital economy is no longer a niche thesis.

The macro environment is a mixed bag. The US conducted its fourth strike against Iran in a week, and Iran claimed it closed the Strait of Hormuz — a claim dismissed by US Central Command but sufficient to drive oil prices higher and stoke inflation concerns. Markets are now pricing at least one more Fed rate hike before year-end 2026. A stronger dollar and higher rates are headwinds for copper, but the supply-demand fundamentals are strong enough that most analysts view rate fears as a temporary cap rather than a reversal signal.

Analyst views are diverging in instructive ways. Citi maintains a base case of $13,000/mt by early 2026 with a bull case of $15,000 if AI demand accelerates and mine supply disappoints further. Goldman Sachs is more cautious, flagging legislative risks to AI data center builds and pointing to copper at $11,100–$11,200/mt if bearish demand scenarios materialize. The gap between these calls — roughly $4,000 per tonne — is unusually wide and reflects genuine uncertainty about the pace of electrification demand versus the rate of new mine supply.