If LME week had a headline metal, this year's would be copper, and for good reason. The metal is currently trading around US$11,000/t and seems to be on the rise.

Metal supply is facing a tightening grip from nationalism, shifting supply chains and softening global growth, while demand continues to be high. 

At a Wood Mackenzie briefing last week, analysts warned that copper may soon become one of the most volatile commodities in the global economy.

Transition story 

Charles Cooper, research director and head of copper at Wood Mackenzie, said copper sits at the heart of a "transition story" distorted by resurgent protectionism and national self-interest.

"In copper, for example, we've seen a sort of movement, a transit," Cooper said. "[Supply constraints] create an overhang to certain markets, particularly copper in this case, that we're going to have to sort of work out how the industry is going to cope."

Cooper said the impact of Trump-era tariffs has been particularly disruptive. "Tariffs are alone one of the biggest problems that anybody who is trying to move things around the world will have to face," he said.

"We could see the re-emergence of rhetoric coming out of the White House that Trump may reintroduce the idea of tariffs [on copper] next year."

Country level 

The warning came as Wood Mackenzie revised down its expectations for US growth.

"We're now expecting GDP growth around about 1.6% falling to about 1.3% next year," Cooper said. By contrast, global growth was forecast at 2.8% this year, easing to 2.4% in 2026.

The relative resilience abroad, he suggested, may not last. "Tariffs haven't really hit the global economy as yet," he said. "They are ready to hit and that will come into [play] next year."

The other side of the equation lies in nationalism, which Cooper said was "the genie that's been let out of the bottle."

Copper's value to modern electrification has made it a test case for government control. "There's overt nationalism," he said. "And then there's resource nationalism... governments in central African countries or in Latin America wanting a larger stake in the resources that they own."

Copper illustrates both. "50% of smelting capacity is certainly located in China," Cooper said.

"Smelting capacity and any downstream capacity is always fraught with the economics, you deal with very slim margins, sometimes below 5%, and that makes it very challenging for investors, certainly from Western capital markets point of view."

Any attempt to rebalance that dominance, he said, would take "multi-decades of concerted effort and funding."

Physical market tensions 

The shift in global trade patterns has already created tension in the physical market.

Meanwhile, mining setbacks from major producers such as Kamoa-Kakula have thinned supply just as political risk has grown.

Peter Schmitz, research director for copper markets at Wood Mackenzie, later turned to the volatility likely to persist in copper.

"We've had a bit of disruption caused by a shift of material into the US," Schmitz said. "We've seen the price spikes come through." But the real question, he said, was whether this turbulence was temporary or structural. 

Schmitz pointed to demand as the quiet variable that could surprise markets. "This is an area that can come back to bite us fairly rapidly," he said. "If we look backwards, where the growth has come from is not where the growth is going to be forwards."

China, while once the overwhelming driver, will remain central but no longer dominant. "The new growth areas are elsewhere. Southeast Asia, India and also in the developed world," he said.

Uses of copper 

That shift brings new uncertainty. "Are these countries really going to develop that way, and are the new uses that we're expecting going to occur in the way that we think?" he asked.

The uses of copper are changing. It is being used less in grid transmission and more in data centres, electric vehicles and the lower reaches of construction.

Data centres alone are expected to drive "0.7 million tons worth of copper demand," with an additional "1.1 million tons in 2030 [...] associated with transmission and distribution," he said. But the actual figure will depend on efficiency and "where the demand-side management is going to be used to supply it."

The scale of that uncertainty is vast. "That's a $75 billion worth of variation, depending on the volume you assume," Schmitz said. "That's bigger than most markets."