Copper prices ignore the Middle East deadlock and surge to a new historical high! Supply and demand mismatch may drive the arrival of a structural bull market.

Despite the seemingly unbreakable deadlock between the United States and Iran, traders continued to join the broader rally in risk assets, driving copper prices towards historic highs. As of the time of writing, London Metal Exchange (LME) copper futures prices rose by 0.17%, reaching $13,589 per ton, briefly rising above $13,600 per ton. Reportedly, Iran has rejected the proposal put forward by the United States, believing that agreeing to it would mean conceding to the excessive demands of U.S. President Trump. Reports indicate that Iran is demanding war reparations from the United States and confirming Iran's sovereignty over the Strait of Hormuz. Iran also emphasized the need to end sanctions against Iran and unfreeze the country's frozen assets. According to an insider, Iran has officially submitted its response to the latest U.S.-mediated proposal to end the war to Pakistan. Iran's response to the U.S.-proposed plan for ending the war focuses on ending the conflict and addressing maritime security issues in the Persian Gulf and the Strait of Hormuz. On May 10th local time, Trump posted on his social media platform "True Social" saying that he had just read the response sent by Iran's so-called "representatives" and that he did not like this response, calling it "completely unacceptable." Despite the continued deadlock between the U.S. and Iran, the upward momentum in risk assets seen in the past week continues into Monday, with various metals including copper and Asian stocks rising together, indicating that investors are not overly concerned about a significant escalation in the Middle East situation. Analysts point out that the market has moved on from the impact of the U.S.-Iran conflict, and copper prices are now following their independent trend, "mainly due to factors such as supply tightness and declining Chinese inventories." Mismatch in supply and demand may herald a structural bull market For copper, in the early stages of the outbreak of the Middle East war, copper prices fell due to market concerns about disruptions to the supply chain and resulting economic growth. But as signs of easing tensions in the Middle East emerged, copper prices have steadily rebounded over the past month. On the demand side, copper is widely used in electric vehicle batteries, data centers, and other areas. With the boom in AI infrastructure construction globally, data centers are becoming true "new copper mines." Copper, a traditional industrial metal, with its irreplaceable electrical and thermal conductivity properties, is becoming a core material to support the development of the AI industry. Morgan Stanley's report predicts that global copper consumption in data centers will increase to 740,000 tons by 2026, contributing 0.6 percentage points to global copper demand growth; by 2027, data center copper consumption is expected to reach 1 million tons (accounting for 2.8% of total demand), and by 2028, further increasing to 1.3 million tons (representing 3.3%), with a compound annual growth rate of 40%. On the supply side, the Middle East situation has also cast a shadow over the global copper market's supply prospects. Sulfuric acid, a key raw material for the wet copper smelting process, is facing supply disruptions due to the Middle East situation. Data shows that global sulfur production was around 84 million tons in 2025, with Saudi Arabia, the United Arab Emirates, Qatar, Iran, and Kuwait accounting for approximately 24%. Sulfur is a by-product of oil and gas production, and the Middle East conflict has disrupted transportation through the Strait of Hormuz and damaged some oil and gas facilities, making it difficult to fully recover in the short term. For important copper-producing countries such as Chile and the Democratic Republic of Congo, the sulfuric acid supply shortfall theoretically has the potential to impact up to 8% of global mineral copper supply. Recent reports from Jefferies also confirm the grim reality on the supply side. Based on disclosed first-quarter production (representing 39% of global supply), total production declined by 4.9% year-on-year and 6.4% month-on-month. Operations challenges from giants like Codelco, Freeport, Ivanhoe Mines, continue to drag down output. Additionally, a report from JPMorgan indicated that Chinese copper inventories are not only continuously declining but also decreasing at a pace well beyond seasonal patterns. Meanwhile, the Yangshan copper premium has remained at around $70 per ton, but after the rebound in LME copper prices, the premium has not weakened further, indicating that Chinese buyers are still actively purchasing at higher prices. Jefferies predicts that by 2030, global copper demand will reach 30.93 million tons, with a compound annual growth rate of 2.1% from 2025 to 2030. Electric vehicles lead the way with a growth rate of 9.6%, data centers and renewable energy (wind and solar power, excluding the power grid) also reaching 6.1% and 6.7% respectively. On the supply side, it is difficult to keep up with the pace, with global copper supply expected to reach only 30.09 million tons by 2030, resulting in a shortfall of about 840,000 tons. Based on this shortfall, Jefferies' long-term price benchmark is that copper prices will reach $6.50 per pound by 2030, equivalent to $14,330 per ton. Jefferies bluntly stated that even in a world where global GDP growth is only 2%, the copper market is expected to see a significant supply-demand shortage over the next 12 months and beyond. This indicates that the core drive behind the current rise in copper prices is not just short-term excitement inflated by macro sentiment, but rather a real "physical scarcity" on the supply side. The copper market may be bidding farewell to the cyclical pattern of "rising for three years, falling for two years" and is likely entering into years of sustained supply-demand mismatch.