Chile's central bank has raised its average copper price forecast to US$5.90 per pound for 2026, even as it simultaneously lowered its domestic economic growth outlook for the year. The revision reflects robust global demand and constrained mine supply, reinforcing copper's status as one of the world's strongest commodity markets. The forecast was reported by Mining.com and signals growing institutional confidence in the metal's long-term trajectory.
The central bank's projections see copper prices easing to US$5.20 per pound in 2027 and US$5.00 in 2028, though still remaining well above historical averages. Chile's state copper agency, Cochilco, separately echoed this optimism, citing tight global supply and accelerating demand from renewable energy, electric transport, and digital infrastructure as the primary price-supporting factors. As the world's largest copper producer, Chile carries outsized influence over global supply dynamics.
According to the U.S. Geological Survey (USGS), the country produced approximately 5.3 million metric tonnes of copper in 2025, representing roughly one-quarter of global mine output. Key producing assets include the Escondida, Collahuasi, and Codelco operations.
Cochilco projects Chilean annual production to reach approximately 5.54 million metric tonnes by 2034, though analysts caution that growth will be gradual given declining ore grades and rising development costs. State-owned miner Codelco, still recovering from output that fell to a more-than-20-year low in 2022 and 2023, expects production to remain close to current levels rather than reaching its previously stated long-term target of 1.7 million metric tonnes per year by 2030. Production from Codelco's own mines reached 1.33 million metric tonnes last year.
Chairman Bernardo Fontaine acknowledged the situation plainly: "It is very possible that it sits at a production rate quite similar to the one it has today." Fontaine also cited unexpected delays and higher costs affecting major expansion projects, while pointing to the El Abra mine — where Codelco holds a 49% stake alongside Freeport-McMoRan — as a promising future investment opportunity. Freeport plans to invest US$7.5 billion to expand that operation. On the demand side, two structural forces are reshaping copper's consumption profile.
The International Energy Agency (IEA) identifies power grids as the single largest driver of future copper demand, as countries invest in thousands of kilometers of new transmission infrastructure to connect renewable energy projects and accommodate rising electricity use. Electric vehicles represent another major demand vector: the IEA estimates that a battery-powered EV requires approximately 2.5 times more copper than a conventional gasoline-powered vehicle. Wind turbines, solar farms, and battery storage systems similarly require significant quantities of the metal.
Artificial intelligence is emerging as a third structural demand driver. AI data centers require transformers, substations, cooling systems, backup power infrastructure, and extensive electrical cabling — all copper-intensive applications. The IEA projects that global electricity consumption by data centers will more than double by 2030, reaching approximately 945 terawatt-hours per year, roughly equivalent to Japan's current total annual electricity consumption.
The bulk of this increase is attributed to AI workloads, with major technology companies including Google, Microsoft, Amazon, and Meta continuing to expand their data center footprints. Looking further ahead, S&P Global projects that global copper demand could nearly double from 28 million metric tonnes per year in 2025 to 42 million metric tonnes by 2040, driven primarily by electrification, clean energy deployment, AI, and digital technologies. The IEA estimates that clean energy technologies could account for almost half of global copper demand by 2040 under a net-zero emissions scenario.
Supply constraints compound the demand picture. The IEA notes that developing a new copper mine can take between 15 and 20 years from discovery to production, encompassing permitting, financing, and environmental review processes. The International Copper Study Group (ICSG) expects global mine production to increase over the coming years, but many analysts believe that growth will fall short of demand requirements due to project delays, declining ore grades, and rising capital costs.
Most market analysts cited by carboncredits.com maintain a constructive long-term view on copper prices, arguing that the structural demand from clean energy and AI infrastructure cannot be met without a sustained ramp-up in mining investment that has yet to materialize at the necessary scale. Chile's updated price forecasts are widely seen as a reflection of that enduring supply-demand imbalance rather than a short-term market phenomenon.
Source: carboncredits.com