Copper Prices Surge Amid Supply Shortage and Unexpected Outage

BHP At All-Time High

Similarly, Rio Tinto achieved a record high of A$185.50 today.

Copper demand remains robust across traditional sectors like construction, electronics, and transportation. This demand is further magnified by a surge in stockpiling as buyers grow increasingly wary of disruptions in global supply chains, exacerbated by “outages” at key mining sites.

Adding to the upward momentum, a report last week suggested that Indonesia’s massive Grasberg mine might delay its return to full production by a year, pushing the timeline from early next year to early 2028.

The latest event to lift copper was a report last week that Indonesia’s giant Grasberg mine might miss its previously announced full-scale restate date by 12-months from early next year to early 2028.

Mine operator, U.S.-based Freeport McMoRan, later disputed the report of an extended delay made by one of its executives in Indonesia, saying it was sticking with the early 2027 re-start deadline.

The mine has been producing at about 45% of capacity since September last year when a catastrophic mudslide killed seven workers and blocked the mine.

Before the outage, Grasberg was producing at a rate of 1.7 billion pounds of copper a year. Since the mudslide it has been reduced to around 700,000 pounds.

Not Just Grasberg

Losing full production from Grasberg followed the closure of the Cobre Panama mine in Panama, and an outage at the Kamoa Kakula mine in the Democratic Republic of Congo.

Reduced supply of copper is occurring as demand rises to meet the rapid electrification of industries including transport where electric vehicles are displacing those with internal combustion engines.

But the immediate issues causing most concern for copper consumers are the effects on supply of stockpiling, and the blockade of the Strait of Hormuz which is not only limiting the supply of oil but also of sulfuric acid produced as an oil by-product and essential in some copper refining processes.

Stockpiling is another element at work in the global copper shortage as major users and some governments squirrel away metal in case supplies dry up in the same way oil supply has been hit by the Iran war.

The U.S. is one of the countries storing copper for a rainy day prompting the investment bank Morgan Stanley to last month report on the market distorting effects of stockpiles.

Project Vault

The bank said that U.S. copper inventories, being amassed as part of the country’s Project Vault, were being viewed as a strategic reserve by the market.

Whatever the explanation there is undoubtedly an unusual market in copper today with overall global inventories reported to be at an all-time high as the price also hits an all-time high, something which is not supposed to happen in a commodity market.

The unusual chain of events in copper was noted by the chairman of Rio Tinto, Dominic Barton, at the company’s annual meeting in the Australian city of Perth last week.

Barton said rising geopolitical tensions was adding to demand for minerals and metals.

“I don’t know if we’re close to a world war, but I definitely think the complexity, the intensity of the changes, the fragmentation, it’s got to be at a 50-to-60 year high,” he said.

“It’s a really volatile time. Part of that is understanding nationalism. Everyone wants to have manufacturing in their country. They want security of supply. Everyone wants minerals for their own use.”