Copper has once again reached historically high levels, and this time not as a temporary phenomenon. This is the assessment presented in Cochilco’s latest Copper Market Trends Report, released this Tuesday, which raised its average price forecast for the red metal to US$4.95 per pound in 2026 and US$5.00 per pound in 2027. This adjustment is significant compared to previous estimates and reinforces the view that Chile is entering a prolonged cycle of elevated prices, with direct implications for fiscal accounts, investment, and the economic policy space available to the next administration.
From the Executive branch, Minister of Mining Aurora Williams explained that this scenario reflects a tight market, characterized by unstable supply and recurring episodes of supply constraints, particularly in copper concentrates. “This is not a situation of permanent equilibrium,” she warned, emphasizing that small disruptions can trigger sharp fluctuations in prices and spot premiums. In other words, the current high copper price reflects a market with limited slack.
Cochilco shares this diagnosis, projecting a moderate refined copper deficit of 238,000 tonnes in 2026, amid critically low inventories in key consumption regions. By 2027, the balance would return to near equilibrium, with a slight surplus of 51,000 tonnes, although without guaranteeing sufficient buffer if inventory rebuilding competes with ongoing demand.
The Boost from Artificial Intelligence
Beyond the short-term balance, the report highlights a structural shift in demand. According to Cochilco’s Executive Vice President, Claudia Rodríguez, copper no longer depends solely on traditional sectors such as construction. A “digital block” is emerging, driven by artificial intelligence and data center infrastructure, which can require up to five times more copper than conventional facilities. This is compounded by strong investment in power grids and renewable energy, establishing a higher and more resilient price floor.
In terms of supply, Cochilco projects global copper production will reach 23.73 million tonnes in 2026 and 25 million tonnes in 2027. Chile is expected to remain the world’s leading producer, accounting for approximately 24% of total output, increasing its production from 5.6 million tonnes in 2026 to 5.97 million tonnes in 2027. However, achieving these figures is not guaranteed.
Greater Fiscal Headroom for the Government
According to Andrés González, Head of Mining Industry Analysis at Plusmining, the immediate impact of higher prices will be reflected in state revenues. “Each additional cent per pound translates into between US$30 million and US$50 million in extra revenue,” he notes. Under this calculation, the projected price increase could result in an additional US$1.2 billion to US$2.0 billion.
González adds that the key challenge will be fiscal management: “If we see extraordinarily high prices, the question is whether those resources are saved or spent,” he states, pointing to the role of sovereign wealth funds such as the FEES.
This issue is particularly relevant in a political context in which a potential administration led by José Antonio Kast could assume office with greater fiscal headroom than currently projected in the budget. Copper prices close to five dollars per pound would facilitate meeting deficit reduction targets, stabilizing public debt, and financing priority programs without raising taxes—provided, as experts caution, that temporary revenues are not treated as permanent income.
From the industry’s perspective, Álvaro Merino, Executive Director of Núcleo Minero, introduces a note of caution. “The main challenge for mining is to increase production,” he argues, recalling that previous projections have not always materialized. In his view, without improvements in permitting processes and greater legal certainty, Chile could miss this
favorable cycle despite high international prices.
“To achieve this, it is necessary to strengthen the institutional framework by accelerating permitting processes, providing greater certainty throughout the process, and creating mechanisms for legal stability, so that private initiative can fully deploy its productive capacity,” Merino concludes.
Optimism in the Markets
Financial markets appear even more optimistic. Jorge Tolosa, an equity trader at Vector Capital, stated that the report “confirms what is already visible in the market,” although he is surprised that Cochilco anticipates equilibrium in 2027, as international investment banks project growing deficits toward 2030. “The scale of new demand has not yet been fully determined,” he argues, which could push prices higher for longer.
A similar view is expressed by Natalí Mercado, Commercial Manager and CEO of Mercado Minero, who speaks openly of a potential new supercycle. “Optimism is in the air,” she says, highlighting new investments, exploration campaigns, and mine life extensions. According to Mercado, copper’s impact filters through the broader economy, stimulating services and trade while putting downward pressure on the exchange rate, with positive effects on costs and imports.
“This is music to the ears of the world’s largest copper-producing country, Chile. Many are forecasting a new supercycle similar to the one experienced just over a decade ago. Chile is prepared, and the signals are encouraging, particularly in terms of investment in the northern regions,” she adds.
From academia, Javier Mella of Universidad de los Andes emphasizes that this cycle differs from previous ones. “It is supported by a broader range of copper applications,” he explains, reducing dependence on China, although the country will still account for around 58% of global consumption. For Mella, the additional fiscal revenue “easily exceeds US$1 billion,” and the main future risk will be safeguarding export competitiveness in the face of a stronger peso.
Source: La Segunda