Copper and the Cost of Mispriced Time

Erik Anderson

12 January 2026

Copper’s Rally Isn’t About EVs: It’s About Scarcity, Optionality, and Mispriced Time

Copper is dominating the headlines recently with sharp price rises since the beginning of Q4. Now sitting over USD$13,000/t, back in November a colleague of mine predicted it would reach $15,000/t by the end of Q1 and we’re not even in the second half of Jan.  

Predictably the explanations have followed the same well-worn path: electrification, EV penetration, renewable build-out, AI data centres, the energy transition. All of these are true to a degree, and largely irrelevant to why copper prices are moving now.

The current copper rally is not demand-led in the way the consensus would have you believe. It is instead a reflection of structural scarcity, capital starvation, and a market that has materially mispriced time. Both geological time and development time.

In this case, this is a distinction with a difference because it changes how durable this rally really is.

Demand narratives are convenient but supply reality is inconvenient

Global copper demand growth is generally steady, not explosive. China remains the dominant consumer, accounting for ~55% of refined copper demand. But its rate of growth has slowed materially. The property sector, which has historically been copper-intensive, is structurally impaired, and while grid investment and manufacturing partially offset this demand shortfall, they have not created a sudden demand shock.

EVs and renewables add to the demand cycle, but on an incremental basis. The idea that copper has suddenly “run out” solely because of EVs is analytically lazy. It is just as well that the rate of EV uptake is falling – if all our current and future copper supply did go to EVs, it would be a poor choice both developmentally and economically.

What has changed is supply and more accurately, the market’s confidence in future supply.

The illusion of elastic supply has broken

For decades, copper markets relied on a comforting assumption: higher prices would incentivise new projects, which would eventually rebalance the market. That assumption no longer holds.

The global copper supply curve has become structurally inelastic due to three forces:

1. Geology has worsened

   
   

   Average copper grades have been declining for decades – almost 30% in the last two decades. Tier-1 discoveries are rare, deeper, more complex, and more capital-intensive. This is not a market cycle.  It is the nature of extracting near-finite resources.

   
   

2. Capital discipline has overshot

   
   

   Following years of value destruction, miners internalised capital discipline so deeply that growth itself has become suspect. Even today, boards are favoring buybacks over greenfield risk. This is despite record prices and margins.

   
   

3. Permitting risk is now first-ranking concern 

   
   

   In jurisdictions like Chile and Peru, social licence, water access, and political uncertainty have turned development timelines from 7–10 years into an exercise in optionality rather than production planning.

The result is a pipeline that looks robust on paper but carries little future certainty and unique risks.  

Inventories tell the real story

Visible inventories remain low relative to historical norms, but more important is where they are low. Stocks on the London and Shanghai exchanges have become increasingly sensitive to minor disruptions, creating volatility disproportionate to headline demand changes.

This is a market priced on marginal tons with insufficient inventory and liquidity to absorb normal variance.

When inventories are reduced, copper tends to behave less like a bulk industrial metal and more like an optionality asset. Small shocks produce outsized price responses.

This is not a Supercycle, yet

Calling this a copper Supercycle is premature.

Supercycles are demand-driven and self-reinforcing. What we’re seeing in copper is constrained supply and a fragile equilibrium. It persists because the market lacks confidence that new supply can be delivered on time, on budget, or at all.

Again, a distinction with a difference, particulary for volatility.

If prices rise too high, too fast, demand destruction will occur at the margin. Substitution, thrift, delayed capex. Certainly in an overburdened consumer market downstream – populations won’t want to bear the brunt of rapidly increasing costs of EVs and even ordinary everyday electronics.  But supply will not respond symmetrically. The result is a market prone to sharp corrections followed by equally sharp recoveries.

In other words: copper is entering a period of higher average prices and higher volatility, not a smooth, linear ascent.

Why this matters

For miners, traders, and investors, the implication is clear:

• Brownfield expansion and low-risk efficiency gains are disproportionately valuable

• Long-dated greenfield projects should be assessed as real options, not some-day plans.

• Balance sheets matter more than growth stories

• Timing risk is now price risk – time literally is money

The copper market is no longer rewarding optimism. It is rewarding credibility. In this environment, misjudging timelines is not just a technical error but a balance-sheet risk.

Looking forward

Copper is rising not because the future arrived early, but because the past under-invested for too long.

The market is not celebrating electrification.  It is pricing regret.

And regret, in commodities, tends to be expensive.