The copper market has experienced a notable shift, with the Copper Monthly Metals Index (MMI) rising by 3.7% from September to October. This increase coincides with a broader upward trend in copper prices, which reached a two-month high on the Comex exchange, surpassing the $11,000 per metric ton threshold by early October. While prices on the London Metal Exchange (LME) have lagged behind their Comex counterparts, both markets have shown a positive trajectory, with Comex and LME prices bouncing 17% and 12% respectively since early August.
This surge is part of a larger pattern affecting various metals, including aluminum, zinc, and tin, which have also seen price increases. A modest decline in the value of the U.S. dollar index has contributed to renewed optimism in the base metals market. Despite persistent global economic challenges that could dampen demand, the fundamentals supporting copper prices have remained strong for several years.
The demand for copper is closely tied to developments in the renewable energy sector. Investments in renewables, particularly solar energy, have historically driven significant copper consumption as the world strives to meet net-zero targets. However, recent changes in policy, particularly in China, have raised concerns about the future pace of copper demand. In mid-2025, China rescinded many of its solar subsidies, including fixed feed-in tariffs, which has led to a rush in solar project installations before the subsidy cuts took effect. This front-loading temporarily inflated the demand for solar modules and related components, including copper.
Yet, as subsidies end, the growth of copper demand linked to solar energy may slow. Developers are likely to defer or cancel projects that no longer appear financially viable without government support. While copper demand from the solar sector is expected to continue increasing, the rate of growth could moderate significantly. Analysts suggest that the end of subsidies may result in a spike in installations followed by a more subdued growth rate moving forward.
In addition to these market dynamics, the recent disruptions at the Grasberg mine in Indonesia have further tightened copper supply. The Freeport-McMoRan-owned facility experienced significant operational interruptions due to mudslide damage and accidents. Following a force majeure declaration in September, production is expected to decrease by approximately 250,000–260,000 metric tons in 2025 and 270,000 tons in 2026 compared to earlier forecasts. Cumulatively, the production loss from Grasberg could reach around 591,000 tons by the end of 2026, shifting the global copper market from a projected surplus into a deficit estimated at 400,000 tons in 2026 alone.
The market responded swiftly to the news from Grasberg, with LME prices climbing 3–3.5% on the day of the announcement. Financial institutions like Goldman Sachs and Citi have since revised their price forecasts upward, projecting copper prices to remain elevated, with estimates for 2026-2027 reaching between $11,000 and $14,000 per ton. These forecasts reflect both the lost supply from Grasberg and the tight market outlook.
Despite these immediate challenges, the copper industry continues to grapple with long-term issues such as declining ore quality and limited growth in mining capacity. Treatment and refining charges remain at record lows, indicating persistent material tightness in the market. The disruption at Grasberg serves as a stark reminder of the ongoing constraints faced by raw material suppliers.
As the global copper market progresses into the fourth quarter of 2025, the combination of supply shocks and evolving demand dynamics presents a complex landscape for stakeholders. While recent price movements indicate a bullish sentiment, the market remains well-supplied, which could pose challenges to sustained price increases. The interplay of these factors will be critical to watch in the coming months as both supply and demand continue to evolve.
