Here's why King Copper's rule will last

Despite all the talk about a shortage, there is actually an excess of copper worldwide this year and should be next year

According to Ole Hansen of Saxo Bank, the commodities story in 2025 was "energy down, metals up hard." The record-breaking rallies in silver and copper are still going strong, but the world's oil men are depressed. Since January 1st, Brent crude has decreased by a fifth. Households are relieved that the primary benchmark for natural gas in Europe is down 45% this year. While the All Metals index has increased by 43 percent this year, the Bloomberg Commodity Energy subindex has decreased by 10% overall.

As Opec producers lift output caps and new players like Guyana enter the market, energy markets are plagued by rumors of massive excess supply. As China continues to switch to greener fuel sources, its appetite for fuel is decreasing.

Next year, the International Energy Agency predicts a surplus of nearly four million barrels per day, or roughly 4% of the world's supply. Trafigura, a commodities company, recently issued a warning about an impending "super glut" as large new oil projects that were planned when prices were high go into production at the same time that prices are falling.

Why is copper the new oil?

Zinc has increased 8% and aluminum has increased 13% this year. However, copper has been the true star, with a 33 percent gain. This month, prices on the London Metals Exchange (LME) have risen above £11,700 per ton. According to James Attwood on Bloomberg, "access to copper is becoming an economic imperative in this one, much as oil dictated the geopolitics of the last century."

Nearly half of all copper mining occurs in just three nations: Peru, the Democratic Republic of the Congo, and Chile. To the dismay of Western politicians, China processes more than 40% of the world's copper. Additionally, it takes 15 years on average to turn a new copper discovery into a profitable mine, and over the past ten years, significant new discoveries have decreased to a trickle.

On the demand side, copper is at the center of mega-trends like the construction of AI data centers and electric cars, which need three times as much wiring as cars with internal combustion engines.

However, not everyone has a positive outlook. According to Andy Home on Reuters, US factory activity has been declining for nine consecutive months, and global manufacturing is in the doldrums. This year's supply shortage is more a result of a "fracture" in the market brought on by concerns that new US tariffs on refined copper will be implemented in 2026. In anticipation of new import taxes, anxious dealers have been shipping large quantities of copper to the US, clearing out European and Chinese warehouses in the process.

According to Goldman Sachs Research, copper prices could "decline somewhat" next year as they retreat from recent record highs. In the fourth quarter, the demand for Chinese refined copper seems to have decreased 8% year over year. Despite all the talk about shortages, there is actually a surplus of the metal worldwide this year and should be next year.

The market is anticipated to enter a deficit in 2029, but the longer-term outlook is bullish as "rising structural demand from power infrastructure" collides with limited new mined supply. According to analysts, LME will cost £15,000 per tonne in 2035.