Leading Economist Is Bullish On Copper. So Why Is The Price Falling?

What Happened

Economist Steve Hanke told his followers to stay long on copper six days ago, hours before the rally stalled. The supply case behind his call, however, has not changed.

Copper Mine Supply is Shrinking for the First Time Since 2017

International Copper Study Group data shows global mine output fell 1.1% in the first half of 2026.

Market Context

The copper price trades near $6.30 a pound on Tuesday, down almost 8% from its early August record, after the metal posted its first losing week since June.

Hanke published his note on September 9, with London Metal Exchange prices still setting fresh highs.

“The price of copper on London’s LME is SOARING. Morgan Stanley now reports that this year could mark the first annual decline in the supply of copper coming from mines since 2017. STAY LONG COPPER,” said Steve Hanke, Professor of Applied Economics at Johns Hopkins University

Freeport-McMoRan’s Grasberg mine is still running at roughly half capacity after a fatal landslide. Chile has cut its national production forecast again. Ore grades are also deteriorating, forcing miners to move more rock for less copper.

Three producers explain most of the shortfall. Freeport-McMoRan still runs its Grasberg mine in Indonesia at roughly half capacity after a fatal landslide. Full output is not expected before early 2028.

AI Data Centers Are Pulling Metal Off the Market

A megawatt of data-center capacity can require 60 to 75 tons of metal, much of it copper. Analysts estimate AI facilities alone could add roughly 475,000 tons of demand this year.

“Copper has led the decline and now looks to be challenging recent lows, extending the cautious tone,” said Neil Welsh, head of metals at Britannia Global Markets

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Why It Matters

The company cut its 2026 guidance for copper from 1 billion pounds to 700 million. Chile, meanwhile, trimmed its national forecast by 2.6% for a second consecutive quarter.

That is why forecasts now vary wildly. Morgan Stanley expects a 600,000-ton deficit. JPMorgan sees 330,000 tons. The ICSG puts the gap closer to 150,000.

Goldman Sachs is less convinced. It argues the rally may have moved too far and warns manufacturers could switch toward aluminum if copper remains expensive.

Copper peaked at $6.92 on August 6 and has since formed what looks like a triple top. It has broken below $6.53 and is now testing support near $6.29. A deeper fall could bring $5.90 into play.

Details

Geology compounds the operational problems. Average ore grades have slipped from around 1.6% in 1990 to below 0.6% at many major mines. Producers now move more rock for less metal.

That squeeze pushed copper to a record above $14,600 a ton this month. A similar supply story drove the recent sugar rally.

At the same time, AI is creating a new source of demand.

The chart is already flashing caution.

Charts show that Copper is still not oversold, with the RSI near 42. If selling continues, the next key support sits around $5.90.

Washington added more pressure after delaying a tariff decision on refined copper imports, sending metal back into LME warehouses.

Hanke’s trade has gone against him so far. The bigger question is whether copper’s shortage story can survive the selloff. Right now, the chart says caution. The mines say something very different.