A metal rally ignited by taxation and supply shortages is forcing the market to reassess copper. LME copper once surged above USD 14,700 per tonne in September to hit an all-time high. However, Indian copper producers are under pressure amid this price surge. According to CCMN on September 24, Indian enterprises face an estimated additional tax burden of USD 3.6 billion due to tariff expectations and are urgently lobbying for tax cuts to ease pressure. The stark contrast between squeezed costs and skyrocketing prices reflects the fragile balance of the global copper supply chain at high price levels.
When fiscal demands of resource nations meet industrial demands of consuming countries, copper pricing is no longer purely driven by supply and demand. Geopolitics and policies carry growing weight, challenging traditional balance-sheet frameworks. Copper has evolved beyond an industrial metal into a strategic asset for portfolio allocation. This shift amplifies price volatility from marginal supply-demand changes.
The demand story is more robust than supply-side trends. UBS warned on September 23 that the global copper supply deficit will widen to 379,000 tonnes by 2027, potentially pushing prices to USD 15,500 per tonne. The core driver lies in higher-than-expected copper consumption from AI computing clusters and power grid investment, while low elasticity of new mine capacity makes it hard to fill the gap quickly.
Domestic China market data validates this revaluation logic: Shanghai Copper futures 2611 contract stands at CNY 110,220/tonne, and Yangtze River spot price for Grade 1 copper averages CNY 112,320/tonne with a spot premium of CNY 1,500/tonne. Power grid expansion, new energy vehicles and data center infrastructure collectively lift the long-term demand curve for copper. Yet supply cannot grow in tandem. Overseas major mines suffer declining ore grades and community disruptions. New mining projects take years from approval to full production. Copper intensity for computing infrastructure is rewriting weights in traditional supply-demand balance sheets. The combined investment in data centers and power grids may push copper demand far beyond projections of conventional models.
Revaluation does not mean a one-way bull run. Uncertain tariff policies remain a major risk. Any change in US refined copper tariffs may temporarily cap LME copper valuations. Nevertheless, tight spot market conditions offer solid support near USD 14,000/tonne. The triple factors of mine disruptions, low inventories and AI-driven demand reprice the strategic value of mineral resources.
For smelters and fabricators, tight raw material supplies squeeze processing margins, shifting profit distribution toward upstream resource owners. The essence of resource revaluation is that the market pays a higher premium for scarcity and strategic importance. As resource nations treat copper exports and fiscal arrangements from a strategic-material perspective, pricing power tilts further toward the supply side and compresses profit margins for downstream processors.
Two key variables to monitor going forward: tariff implementation schedules of major economies and mine restart progress. Spot premium serves as the most direct indicator of physical market demand and whether the supply deficit thesis holds.
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Driven by long-term computing infrastructure and energy transition trends, non-ferrous and precious metals are gaining stronger strategic status. The resource recycling sector embraces new opportunities. High-performance metal extraction technologies and complete equipment become essential tools to unlock secondary mineral value and capture dividends from resource revaluation.
