Frank Talk: Copper supply faces first annual decline since 2017
Copper prices hit record highs, with LME at $14,779/ton and NY futures at $3.74/lb, up 24% YTD. Frank Holmes of U.S. Global Investors (GROW) attributes this to supply constraints, not tariffs. Global mine production fell 1.1% H1 2026, with Chile's output at 19-year lows. Morgan Stanley (MS) now expects flat or lower production, the first annual decline since 2017. Demand is rising due to AI data centers and electricity infrastructure, with S&P projecting a 50% increase by 2040. Copper mining sto
How this was made
The 30-second read
Why it matters
Supply constraints may keep copper prices elevated, supporting mining equities but raising cost pressures for downstream industries.
Market read
Copper's supply squeeze underpins a bullish commodity theme, influencing mining stocks and related sectors.
What to watch
Potential policy changes on tariffs or unexpected demand shifts in data centers could alter the supply‑demand balance.
Background
The article discusses a structural supply deficit in copper, citing production declines in major mining regions and rising demand from AI data centers.
Ticker impact
Freeport-McMoRan reported double‑digit production declines and its stock is up 44% YTD.
Potential downside risk if supply concerns ease.
Declining output offsets price gains; investors may reassess valuation.
Southern Copper is mentioned as up around 45% YTD amid copper supply concerns.
Possible pull‑back if supply outlook improves.
Rally driven by price, not fundamentals; supply slowdown could limit upside.
Teck Resources is noted as up about 45% YTD as copper prices rise.
Risk of moderation if copper supply constraints ease.
Market pricing reflects supply worries; any shift in outlook could affect stock.
Market effects
Copper supply slowdown could sustain high commodity prices, benefiting miners but pressuring downstream users.
Chile's production dip may affect Latin American mining exposure.
Supply constraints reinforce bullish outlook for copper across global markets.
Counterpoint
If new deposits accelerate or demand softens, copper prices could correct sharply.
Key entities
- CompanyFreeport-McMoRan
Major copper miner reporting production declines.
- CompanySouthern Copper
Copper producer with strong stock performance.
- CompanyTeck Resources
Copper miner benefiting from price rally.
