How to capitalize on the "copper" rally: three companies, one ETF and futures

The price of copper rose nearly 80% from its low in April 2025 to its peak in January 2026. This metal has been one of the beneficiaries of the AI boom. Its price may continue to rise. Independent analyst Mikhail Zavaraev discusses how investors can capitalize on this.

At the recent Davos Economic Forum, participants once again discussed the importance of key materials for the further development of AI. Among them is copper. According to the data of the World Economic Forum, by 2035 the deficit of this metal may reach 25-30%. These concerns are echoed by S&P Global analysts, who predict a 50% increase in demand for copper to 42 million tons by 2040, which could lead to a deficit of 10 million tons of "red gold" if mining and processing volumes are not increased. Wood Mackenzie, for example, expects a shortage of the metal as early as 2026. Goldman Sachs, on the contrary, forecasts a supply surplus of 300,000 tons this year (the bank's earlier forecast was only 160,000 tons), although it admits that there may be a shortage of this critical metal in the future.

Judging by the dynamics of copper prices, supporters of a substantial deficit are still winning among market participants. From a low in April 2025, when U.S. President Donald Trump announced the introduction of duties on goods from dozens of countries, to a peak in January 2026, the price of copper on the LME rose by almost 80%. On Jan. 29, the price jumped to $14527 per ton at one point. Before that, it had been trading in a wide range of $7000-$11000 for a long time. Now the price is at about $13 thousand.

And although much of the recent price growth is speculative, one cannot but recognize that the balance of power in the copper market is shifting to the side of sellers, who for a long time were forced to reduce investments in the development of new deposits due to relatively low prices and demand for the metal.

The current situation plays into their hands to a certain extent.

Copper has been a cyclical industrial metal throughout its history and is highly dependent on economic growth and construction activity. Periods of significant increases in prices, demand, development investment, etc. have been regularly followed by periods of stagnation and a marked fall in metal prices, as well as reduced spending on exploration and new plant construction.

But now we may be witnessing Ma becoming not just an industrial metal, but a strategic asset critical to the economy of the future. Not surprisingly, some countries, such as the United States, are already making some efforts to accumulate copper reserves.

Demand for copper will remain strong not only in the near term but also in the longer term.

Metal is absolutely essential to the further development of AI. It actually powers, connects and cools servers. Only a small Microsoft data center, for example, uses copper at a rate of 27 tons per 1 megawatt of power. Already by 2035, data centers will probably consume 106 gigawatts of electricity, more than 2.5 times their current consumption.

Equally important for copper demand is the so-called "energy transition", which among other things involves a significant increase in the number of electric vehicles, which consume about four times as much copper as a conventional car.

We should not forget about the development of the global economy, which implies a noticeable increase in electricity consumption, especially in developing countries. When we say "electricity", we always mean copper, taking into account the unique physical and chemical properties of this metal.

The recently resumed arms race is also expected to boost demand for copper, as is the expected surge in robotics - the same billionaire Elon Musk expects the number of humanoid robots to exceed 1 billion units by 2040.

The key problem with the significant growth in demand for copper is that it is either very difficult or virtually impossible to replace in most places, which prevents a so-called natural price ceiling for the metal.

Yes, for certain purposes you can use aluminum, the price of which, not surprisingly, has also increased significantly recently. But it is by no means a perfect substitute for copper, which has its own, quite specific, limitations.

But we should not forget that the anticipated significant growth in demand for copper will not automatically translate into demand for this metal. After all, it depends not only on the desire, but also on the ability to purchase a product or service at a specific price. And there are big doubts that at prices above $15 thousand per ton, and even more so at $20 thousand, the real demand from buyers will correspond to the current optimistic estimates that suggest a significant shortage of metal in the future. Price is still a very important factor, and if it is very high, there will be a shortage, but not as significant as currently assumed.

In turn, producers will not be able to increase the supply of copper on the market in any significant way even in the medium term. First, the lag between exploration and commercial development is very long - from 15 years in Mexico to 23 years in the Philippines. Moreover, it is becoming increasingly difficult to find large, high-grade deposits every year. This is a common problem for commodity markets, which implies that mining costs will only continue to rise and that a significant increase in metal supply is only possible if the copper price is relatively high in the future.

Since the end of the so-called copper super-cycle in 2010, the entry of new projects into the market has been very limited. Plus, on a regular basis, unforeseen circumstances arise that lead to (sometimes quite prolonged) partial or complete mine closures - historically, 6-8% of the world's copper production capacity is idled each year.

So far, the situation does not look like a stalemate. At least, according to Goldman Sachs calculations, in 2025 the market still had a surplus of 600 thousand tons of copper production, which was the largest excess of supply over demand since 2009. However, this did not prevent the price of copper in 2025 from also rising at the highest rate of growth in 16 years.

Again, metal inventories on exchanges outside the US continue to grow, despite the continued growth in the US strategic copper reserve. At the international exchanges at the beginning of 2026 they exceeded 900 thousand tons. However, most of them fall on the American COMEX - about 500 thousand tons.

The projected significant growth in demand for copper, as well as a marked increase in production costs, suggests that the copper price will continue to rise in the long term. In principle, this is fully consistent with historical data - at the turn of the 21st century, copper was trading at around 60-65 cents per pound, and recently crossed the level of $6 per pound. But we should not forget that periods of explosive growth in copper prices can be followed by quite long periods of decline in the value of this metal. For example, throughout most of the 1990s, the price of copper was falling.

Buying metal futures at any price in the hope that the AI frenzy will allow to continue storming new highs does not look like an optimal strategy, especially after significant speculative price growth in recent months. But to buy out noticeable corrections in the metal, for example, if the price of copper falls to $11 thousand per ton, already looks like a much more reasonable and logical investment decision. On February 4, the price in London was $13.04 th. per ton with delivery in three months.

The same goes for buying individual companies related to the copper market. Yes, it is possible to build a portfolio of relatively large copper producers with a diversified asset base that boast high operating efficiency and a "financially healthy" balance sheet. At the very least, unlike metal futures, they at least pay dividends.

The problem is that many companies in the sector have relatively low dividend yields. Again, we should not forget that following the growth of metal prices, the quotations of metal producers also soared. It is unlikely that they will be able to avoid falling in case of a correction in the metals market. But any corrections, of course, should be bought back.

In this case, you can focus on a portfolio of Anglo American (since the beginning of the year its securities on the London Stock Exchange have increased in price by a little over 15%), Freeport McMoRan (growth since the beginning of the year about 22%) and Antofagasta, whose quotations have grown since the beginning of the year by 10.6%. Another option is ETFs (for example, Global X Copper Miners ETF) - greater diversification allows you to avoid risks associated with internal problems of individual companies.

Does not constitute an investment recommendation.

This article was AI-translated and verified by a human editor