Copper is being squeezed where it starts. China has halted most exports of the sulphuric acid used to make about a fifth of the world’s refined copper, copper ore is so scarce that smelters agreed to process it for nothing in 2026. And the world’s mines are producing slightly less than a year ago.
London copper had set its highest settlement on record in August 2026, at US$14,850 a tonne. On the ASX, the three largest copper producers on their latest reports are BHP, Rio Tinto and Capstone Copper.
The catch? The shortage is in ore, not finished copper, and forecasters disagree on how long it lasts. Here’s what’s confirmed, what’s forecast, and what could change it.
What changed
Three pressures on copper supply have landed together. The first is the acid. China restricted most exports of sulphuric acid from May 2026, and in September allowed its first cargo since then “despite wider export restrictions remaining in place”, according to Squire Patton Boggs. The Australian government’s Resources and Energy Quarterly for June 2026 says about 20% of the world’s refined copper is made with the acid, and that Chile, the world’s largest copper supplier, sourced 37% of its sulphuric acid from China.
The second is the ore itself. The International Energy Agency’s Global Critical Minerals Outlook 2026 says benchmark copper smelter fees were settled at USD 0 per tonne in 2026, “the lowest level ever agreed in annual negotiations”, and that spot charges have been negative since 2024. That fee is what miners pay smelters to turn ore into metal. When it falls to zero, smelters are competing for ore that is in short supply. Rio Tinto described the copper concentrate market as “extremely tight”, with spot charges at a record low of minus US$150 a tonne at the end of June.
The third is the mines. The International Copper Study Group reports world mine production of 13,321 thousand tonnes from January to July 2026, down 0.8% on the 13,427 thousand tonnes mined in the same months of 2025. One reason is Grasberg in Indonesia, one of the world’s largest copper mines, where what its operator Freeport calls a mud rush in September 2025 forced a closure. Freeport’s second-quarter results describe a phased restart, with production expected to approach full capacity by the end of 2027. Grasberg is not alone. In the Democratic Republic of Congo, the government’s quarterly records output at Ivanhoe Mines’ Kamoa-Kakula complex down 46% year on year, to 71.4 thousand tonnes, in the March quarter of 2026, after seismic events in 2025. Ivanhoe guides 290,000 to 310,000 tonnes of copper for 2026 and targets a return to over 500,000 tonnes a year from 2028.
Why it binds
The acid matters because of how some copper is made. In the solvent extraction and electrowinning process, sulphuric acid dissolves copper out of the ore before it is plated into metal. The government’s quarterly says the DRC produced around 2.8 Mt of refined copper, about 10% of global output, with most of it from that process. A shortage of a chemical most people never think about therefore reaches the price of the metal in household wiring.
Copper supply cannot respond quickly. A mine that loses output, as Grasberg did, takes quarters or years to recover, and new mines take far longer. The IEA projects copper supply deficits to persist through 2035, with the projected gap in 2035 at 25% of demand, narrower than the 30% it projected a year earlier.
The squeeze shows in the price. On the London Metal Exchange’s official cash settlement series, copper settled at US$14,850 a tonne on 17 August 2026, the highest in the series. On 30 September it settled at US$14,487, up about 40.6% on a year earlier.
It is worth being precise about where the shortage sits. It is in ore and mine supply. The market for finished, refined copper is closer to balance: in its April forecast, the Study Group expected a refined surplus of about 96,000 tonnes in 2026, after forecasting a 150,000 tonne deficit the previous October, and LME warehouse stocks were 248,075 tonnes on 1 October 2026 against 141,725 tonnes a year earlier. Forecasters disagree on the balance. Analysts polled by Reuters in January expected a 2026 market deficit of 238,500 tonnes, and Goldman Sachs estimated in June that the deficit outside the US could reach 640,000 tonnes. The Study Group meets again in October to update its forecast. The government’s own outlook expects supply to show only gradual growth because of delays in new mines and expansions.
Who absorbs it
When ore is short and the price is high, the companies that dig copper sell into that price. Copper miners’ revenue moves with the price they realise for each tonne.
On the ASX, the three largest copper producers by output on their latest reports are BHP, Rio Tinto and Capstone Copper. BHP produced 1,952.8 thousand tonnes of copper in the year to 30 June 2026, around 2 Mt for the second year running, and its full-year results say copper contributed more than half of its underlying EBITDA. Rio Tinto produced 442 thousand tonnes in the first half of 2026 and guides 800 to 870 thousand tonnes for the year. In its half-year results, copper earned US$5.7 billion of Rio’s US$14.8 billion underlying EBITDA, behind iron ore at US$6.8 billion. Capstone Copper produced 99,719 tonnes in the first half and guides 200,000 to 230,000 tonnes for 2026. It reported record revenue of US$739.7 million for the June quarter, at a realised copper price of US$6.22 a pound.
The catch is that a miner’s earnings depend on its own output and costs as well as the copper price. Grasberg shows how quickly a single operation can lose output, and BHP and Rio Tinto also produce iron ore and other commodities. Smaller ASX-listed copper-focused producers include Sandfire Resources, which produced 105.7 thousand tonnes in its 2026 financial year.
Whether any of these fits your portfolio depends on your own goals and circumstances. Nothing in this report is a recommendation to buy or sell any of these companies.
Australia is also exposed through exports. The government’s quarterly estimates Australia’s copper export earnings at A$14.6 billion in 2025-26 and forecasts them to rise to over A$16 billion in 2026-27.
What to watch
The test is whether the mines catch up. The International Copper Study Group meets in October 2026 to update its supply and demand forecasts, and its monthly bulletin tracks world mine production against usage.
If mine supply keeps falling behind, the pressure on copper could last. If the mines recover, including Grasberg on Freeport’s timetable to the end of 2027, it could ease.
For BHP, Rio Tinto and Capstone, the next production reports are worth watching. Their own output matters as much to their earnings as the price itself.
