Copper Price Breaks Through $14,000. "Perfect Storm" Sweeps the Globe, Who Is Pushing Up This "Industrial Red"?

As a core raw material for copper refining, the tight supply of sulfuric acid is one of the key factors driving up copper costs. Nearly half of the world's seaborne sulfuric acid originates from the Middle East, while about a quarter of the sulfur required for sulfuric acid production is supplied by major Persian Gulf oil producers such as Iran, Saudi Arabia, and the UAE—sulfur being a byproduct of petroleum refining, these nations have become major sulfur producers by leveraging their oil industry dominance.

However, due to the conflict in Iran, the duration of shipping disruptions in the Strait of Hormuz has far exceeded market expectations. Seaborne transport of sulfuric acid has come to a standstill, while its highly corrosive nature makes land transport difficult to implement, causing the supply-demand gap to continue widening.

Marex analyst Edward Meir emphasized that the duration of transit restrictions in the Strait of Hormuz has exceeded expectations, further amplifying market concerns regarding alternative transportation routes for sulfuric acid.

Compounding the issue, China has also tightened restrictions on sulfuric acid exports since May, further exacerbating the global supply crunch.

Sulfur prices have recently broken through $1,200 per metric ton, hitting a record high, a trend confirmed by fertilizer giant Mosaic in its latest quarterly report.

At the same time, rumors regarding the restart of Freeport-McMoRan's Grasberg copper mine in Indonesia have also rattled the market. Reports suggested that the mine's restart would be delayed until early 2028; although the company subsequently denied the rumors and maintained its plan for a late-2027 restart, the news still boosted copper prices in the short term.

Furthermore, Jacob White, Director of ETF Product Management at Sprott Asset Management, pointed out that the copper industry was already facing the challenge of declining ore grades long before the current supply tightness emerged—lower copper content in ore directly results in a decline in production capacity. Simultaneously, issues such as long development cycles for new mines and restricted project approvals continue to constrain copper supply capacity.

Typically, rising metal prices stimulate capacity expansion, eventually easing supply pressures while curbing some demand. However, White noted that copper supply is limited by physical factors such as geological conditions, permitting processes, and infrastructure—constraints that are unlikely to be resolved in the short term.

The current rally in copper prices is both a result of intensifying supply shortages and the powerful support of sustained demand growth.

With its superior electrical and thermal conductivity, high-purity copper has become an indispensable core material in AI computing infrastructure. Whether in power supply modules and signal transmission systems for AI servers, or high-speed interconnect cables and liquid cooling components, high-purity copper is vital for stable operation under high-load scenarios, and its technical advantages are difficult for other materials to replace in the short term.

As global tech giants race to scale up computing infrastructure, the pace of hyperscale data center construction has accelerated significantly. A single data center housing tens to hundreds of thousands of AI servers, combined with high-speed interconnects and liquid cooling systems, can consume thousands of tons of copper, with some supercomputing-scale projects even exceeding the 10,000-ton mark.

Investor attention is gradually shifting beyond short-term geopolitical disruptions toward positioning for mid-to-long-term upside in copper prices. Bart Melek, Head of Global Commodity Strategy at TD Securities, noted that trading activity in the options market has surged recently, with substantial capital betting on further price gains through derivative instruments.

Meanwhile, the latest forecast from Scotiabank mining analyst Orest Wowkodaw indicates that the global copper market could see a supply deficit of 350,000 tons by 2027, whereas just two months ago, he expected the market to trend toward a supply-demand balance.

"This truly constitutes a 'perfect storm' for copper prices—even at elevated levels, the supply side remains subject to multiple rigid constraints," Wowkodaw stated at an industry event in Toronto. He further emphasized that the current strength of global copper demand is 'unprecedented,' providing a solid foundation for a 'higher for longer' price environment.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.