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Informist, Tuesday, May 26, 2026

 

MUMBAI – Copper is increasingly emerging as the next major driver of the commodity supercycle, as investors shift focus from precious metals toward industrial commodities due to strong structural demand and tightening supply conditions, HDFC Securities said in a report. After a sharp rally in gold and silver through 2024–25, market indicators now point to a possible rotation into base metals, with copper positioned at the centre of this transition, the brokerage said in a report. A commodity super cycle is a prolonged period during which commodity prices surge significantly above their long-term historical averages.

 

Market participants now indicate a potential rotation toward base metals, particularly copper, owing to its critical role in long-term global growth trends. Demand for copper is being driven by three major structural factors – global electrification, the rapid expansion of artificial intelligence-led data centres, and the energy transition.

 

Meanwhile, Chile's shifting copper output metrics have impacted global supply calculations. As the world's largest copper producer, the country has faced operational disruptions, water shortages, and a lack of major new high-grade discoveries, tightening the market for copper concentrates. "This supply framework remains a key variable as global supply chains adjust to offset changes in Chilean production volumes amidst rising demand for energy transition metals," the report said.

 

The ongoing war in West Asia is driving up energy costs, forcing vulnerable nations to quickly switch to local renewable energy and upgrade their power grids. "This massive expansion of electrical infrastructure is highly positive for copper, as the metal is essential for the wiring and components needed to connect new power systems," the report said.

 

Moreover, copper is also emerging as the next major driver of the commodity supercycle, supported by a stretched copper-to-gold ratio at multi-decade lows. The copper-to-gold ratio has been declining within a well-defined descending channel since 2011 and is now testing the lower boundary. "In 25 years of data, readings below roughly 0.15% have been followed by significantly stronger forward returns for copper," the report said.  End

 

Reported by Reshma Ravi

Edited by Saji George Titus

 

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