S&P Global has warned that without additional mining and recycling efforts, the copper industry could face a deficit of over 10 million metric tons by 2040, which could result in nearly a quarter of the projected demand remaining unmet.
According to the Copper in the Age of AI report released on Thursday, S&P expects demand for the red metal to soar to 42 million metric tons annually by 2040, a 50% increase from 2025.
The AI, defense, and robotics sectors are expected to be the primary drivers of this surge, with China and Asia-Pacific countries leading the demand growth. The agency forecasts that energy transition demand will be the largest source of copper demand growth between 2025 and 2040, requiring an additional 7.1 million metric tons of annual copper demand between now and 2040.
Geopolitical factors, such as the conflict in Ukraine and increased defense spending by countries like Japan and Germany, will further drive the demand for copper.
“The intersection of accelerating demand, constrained supply, and concentrated processing capacity creates systemic risks that require responses from policymakers, regulators, industry, and investors,” S&P warned.
Copper Rally Underscores Supply, Tariff Risks
Copper prices have rallied since the start of the year to above $13,000 a ton, driven by supply concerns and trade-related disruptions. Copper, a crucial component in electric vehicles and consumer appliances, has seen its prices surge more than 43% in 2025, clocking its best performance since 2009.
Problems at major mines in Indonesia and the Democratic Republic of Congo, followed by a strike in Chile, depleted buffer supply and revived speculative interest, while analysts have warned these pressures reflect deeper structural issues in the market.
Stockpiling in the U.S, as uncertainty over President Donald Trump's tariff policy prompted traders to divert more copper shipments to American warehouses, has also pushed up prices of the red metal.
On current trends, global copper production will peak in 2030 before falling again even as demand continues to rise, according to S&P.
Price Action: Over the past year, Global X Copper Miners ETF (NYSE:COPX) and the United States Copper Index Fund (NYSE:CPER) surged 92.44% and 34.29%, respectively, as per data from Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
