Explained: Opposing factors from Iran leave copper price elevated despite pressures

Copper has remained relatively flat since the start of the conflict in Iran, though it has shown some volatility day-to-day. Its apparent steadiness is a result of pressures both upward and downward on its price.

Higher interest rates and inflation as a result of the war could add to mining and smelting costs, pushing prices higher. In the short term, however, and with prices generally very high at present, increased borrowing costs could slow demand and exert downward pressure.

The highly uncertain global macroeconomic outlook will likely lead to less volatile prices as the implications for copper come into view, says Benchmark analyst Albert Mackenzie.

“The impacts of the conflict are many and both bullish and bearish for copper prices, explaining the seeming resilience of the copper price, but also why it even occasionally reacts positively to news that on the surface may not seem it,” he adds.

Gulf consumption likely to fall

Benchmark expects copper demand to be affected more than supply in the region and globally, though this will be offset somewhat in the longer term by likely increased investment in energy self-sufficiency.

In 2025, Iran produced 361kt of mined copper and 327kt of refined copper, with consumption of 193kt. News reports indicate two Iranian smelters that produced a combined 280kt of refined copper in 2025 have closed, but production in the region more broadly is relatively insignificant.

Saudi Arabia and the UAE are not producers. They are, however, relatively large consumers of copper, consuming 191kt and 396kt in 2025 respectively, with much of this moving through the Strait of Hormuz. Demand in Iran is also likely to be challenged by the effects of the war on its economy. Beyond the Middle East itself, higher energy prices could cut consumption across economies in the immediate term, including of copper-containing products.

There will, in the longer term, be some price support from the strengthened case for investment in locally available energy sources and grids. This bolsters base-case bullishness on electrical infrastructure growth as a demand driver, which currently accounts for just over 30% of global demand, expected to grow at 3.6% CAGR across between 2025 and 2030.

Energy trading crowding-out

Among participants, the increased profitability of energy trading means some players have had to liquidate other positions to free up capital for energy trading, pressuring other commodities, potentially including copper. However, sources have noted copper trading remains a more interesting prospect than some metals, and it therefore may have retained interest better than other commodities.

Sulphuric acid tightness will increase SX-EW costs

The closure of the Strait of Hormuz has heavily strained the global supply of sulphur and sulphuric acid, of which Gulf states are major producers. This will increase the cost of SX-EW production.

Depending on the scale of the disruption, Benchmark is currently forecasting a resultant 70-200kt disruption to Chilean SX-EW production, while the DRC, which uses less acid in production per tonne of copper produced but is the world’s largest SX-EW producer, could also be affected. Any offsetting impacts of sulphuric acid made available from SX-EW are expected to be felt later in 2026 or in 2027.

Some sources have suggested mines may reduce production, though this has yet to materialise.

Benchmark expects sulphuric acid tightness to positively impact smelter profitability. Global refined supply will likely remain unmoved by this, however, as smelter utilisation rates are as high as possible, given the concentrate deficit.

While smelters benefit from higher acid prices, they are already processing all available concentrates, meaning there will be no significant change to the refined copper balance. Fuel availability could be a concern for the copper industry, though not an immediate one, according to sources. Logistics cost increases could also increase production costs, though not significantly.

This articles draws on data and analysis from Benchmark's Copper Service. To find out more, fill in the form below and one of the team will be in touch: