Copper: A Capex-Driven Supply Mismatch

The acceleration in AI infrastructure, power grids, electrification and industrial reshoring is driving a structurally higher level of commodity-intensive capex. These trends are multi-year by nature and largely insensitive to short-term economic cycles. 

Global copper demand is expected to grow materially through the next decade, while the current project pipeline falls well short of covering incremental needs. Most credible forecasts point to persistent and widening supply deficits from the late 2020s onward.

Brownfield expansions, processing improvements and new extraction technologies can improve recovery rates and delay shortages, but their contribution remains incremental. Greenfield projects typically require 15-20 years from discovery to production, making supply inflexible in the face of rising demand.

Following the sharp rise in silver prices, manufacturers are increasingly incentivized to substitute silver with copper where technically feasible, notably in solar panels and certain electrical applications, adding an additional layer of demand.

China represents more than 50% of global copper consumption and remains the key marginal buyer. Ongoing policy support for growth, infrastructure and capital markets reinforces domestic demand and amplifies global supply tightness.