The Sidekick #031 | The Copper Crunch: Ore You Kidding Me?

July 27, 2026

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Ore You Kidding Me?

The copper crunch, friendshoring, and more.

Welcome to edition #31 of The Sidekick!

Copper has become a structural problem for procurement teams in a way most have not yet registered. Prices are at record highs, the deficit is the worst in nearly two decades, and there is no mine on the planet that can close the gap before 2030. We cover what is driving it, who is most exposed, and what sourcing teams can do about it now.

We also unpack the real meaning of friendshoring, look at the ocean freight surge that has caught importers off guard, and take stock of where agentic AI in procurement has actually landed.

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Let's get into Issue #031...

The GPO Evaluation Playbook: Comparing & Selecting GPOs

Every GPO pitch sounds the same. This playbook helps you cut through the noise to evaluate cost structures, category fit, and service quality so you choose a partner that actually delivers.

The Copper Crunch

Ore you kidding me?

Right now, the global market for refined copper is moving into its most serious structural shortage in nearly two decades, with implications that touch procurement teams in almost every category and industry.

Copper prices have spent 2026 setting records. The International Copper Study Group, the body that historically provided the most conservative official forecasts, has formally abandoned its earlier projection of a market surplus and now forecasts a deficit for 2026, marking the first structural shortage since 2009.

Wall Street sees it as worse still: Morgan Stanley and ING Group are projecting deficits closer to 600,000 tonnes, and J.P. Morgan Global Research is forecasting a refined copper shortfall of 330,000 metric tons in the United States alone.

$6.71: Record COMEX price per pound, May 2026
600,000 Tonnes: Projected 2026 global refined copper deficit (Morgan Stanley)
16 Years: Average time from copper discovery to production
10 Million Tonnes: Projected cumulative shortfall by 2040 (S&P Global)

Three Problems Hitting at Once

Three separate forces are compressing supply and inflating demand simultaneously, and they operate on entirely different timelines.

Mine-Level Disruption

Chile produces roughly a fifth of the world's copper, but its output has deteriorated significantly this year due largely to ore grade decline.

Codelco, the state-owned producer that is one of the world's largest single copper companies, has seen output fall around 10 percent. BHP’s Escondida mine, the largest copper mine on earth, has declined by more than 15 percent. The Glencore and Anglo American joint venture at Collahuasi, also in Chile, is down more than 10 percent.

This is the concentrated heart of global copper supply losing a material share of its output at the same time. Add to that the 2025 mudflow that temporarily shut down Grasberg in Indonesia, the second-largest copper mine in the world, and earthquake-related flooding at the Kamoa-Kakula mine in the Democratic Republic of Congo, and the picture of disrupted mine supply becomes very clear.

Processing Bottlenecks

These roadblocks are invisible in most headline coverage. Even where ore exists, converting it to refined copper cathode requires smelting infrastructure, and that infrastructure is operating under extreme stress.

Treatment and refining charges, the fees that miners pay smelters to process ore, collapsed to record lows in 2025, signaling a critical shortage of concentrate available for processing. In response, Chinese smelters, which account for 40 to 45 percent of all global refining capacity, have implemented production caps of around 20 percent to protect their margins.

The result is that even when new ore becomes available, the pipeline to turn it into usable refined copper is constrained by deliberate output restriction. This is what analysts are calling a hidden bottleneck, and it is one that tariff policy and mine investment cannot fix quickly.

Demand

Demand is only moving in one direction. The electrification of transportation, the expansion of power grids to support renewable energy, the build-out of AI data centers, and increased defense spending across NATO members are all copper-intensive at a scale the market has not previously had to absorb simultaneously.

S&P Global projects that global copper demand will reach 42 million metric tons by 2040, up 50 percent from current levels. AI data centers alone are consuming copper at rates that were not modeled in prior demand forecasts. Each data center requires enormous quantities of copper wiring, busbars, cooling infrastructure, and power distribution equipment.

Why Supply Cannot Simply Catch Up

The most important number in the entire copper supply story is 16 years. That is the average time between a copper discovery and the start of production. The industry has made only 14 major copper discoveries in the past decade, representing a tiny fraction of all copper found since 1990. Even if a major new deposit were confirmed tomorrow, it would not begin producing copper until well into the 2040s.

The mining industry, as currently configured, lacks the project pipeline to close the supply gap within any relevant planning horizon, regardless of what copper prices do. This is the structural reality that separates the copper situation from a standard commodity cycle.

In a cycle, high prices attract investment, investment builds new capacity, new capacity increases supply, and prices fall. That mechanism works when the lag between price signal and new production is measured in months or a few years. When it is measured in decades, and when the physical and regulatory barriers to new mining are as high as they are today, the cycle breaks down.

UBS projects copper prices reaching $15,000 per tonne by early 2027. Goldman Sachs offers a more conservative view, noting that aluminum substitution and increased scrap recovery could moderate prices, with a range of $10,000 to $11,000.

But even the most conservative institutional projections show copper remaining more expensive than it was two years ago for the foreseeable future.

The Tariff Layer

On top of the supply and demand dynamics, U.S. procurement teams face an additional cost pressure specific to their market. The Trump administration has already installed 50 percent levies on semi-finished copper products and copper derivative products imported into the United States.

A further Section 232 tariff decision, which could add another 15 percent or more, has been causing market anxiety through mid-2026. The tariff threat has accelerated buying activity among U.S. manufacturers and construction firms, pulling forward demand and tightening the domestic market ahead of any official change. The effect is a domestic price premium on top of an already elevated global benchmark.

Who Is Most Exposed?

The categories with the highest direct copper exposure are electrical and electronics, HVAC and mechanical systems, industrial machinery, construction, and data center infrastructure.

But indirect exposure is wider than most procurement teams realize. Any organization spending significantly on electrical contractors, building upgrades, fleet electrification, or technology infrastructure is absorbing copper price inflation through supplier cost structures, even when copper does not appear as a line item in their own purchasing.

Healthcare organizations procuring medical equipment and wiring infrastructure, hospitality groups managing facility upgrades, and any business embarking on sustainability or electrification capital projects are all carrying copper risk they may not have formally assessed.

What Procurement Teams Can Do

Audit your copper exposure across direct and indirect spend. Map which of your supplier categories have significant copper content in their cost structures, even where you are not buying the metal directly. HVAC, electrical contracting, data infrastructure, and industrial equipment are the most common hidden exposures.
Accelerate planned capital purchases. If your organization has deferred electrical infrastructure, HVAC replacement, or equipment purchases involving significant copper content, the cost of delay is compounding. A procurement that made sense at $9,000 per tonne looks very different at $14,000, and the trajectory from here is not pointing down.
Evaluate aluminum substitution in relevant applications. In some wiring and cabling applications, aluminum can substitute for copper at a meaningful cost saving. This requires engineering review and is not universally appropriate, but it is worth assessing in any category where copper content is high and specifications are not fixed by external requirements.
Build price escalation clauses into longer-term contracts. Suppliers in copper-intensive categories are under margin pressure and will seek to pass cost increases through. Contracts that include transparent commodity index escalation mechanisms are fairer to both parties and give procurement teams visibility into cost drivers that would otherwise be obscured in general price increase requests.
Investigate scrap copper sourcing. When primary copper prices are high, scrap markets typically offer a meaningful discount. If your supplier base or category specifications allow for recycled content, this is worth exploring as a cost management lever.
Add copper to your commodity monitoring dashboard. The factors driving the current shortage are multi-year in nature. Procurement teams that track the LME copper price, monitor the ICSG quarterly reports, and watch the Chilean mine output data will be better positioned to time contract renewals and make forward purchasing decisions.

What is Friendshoring?

...and does it actually work?

Friendshoring has become one of the most used terms in supply chain strategy over the past two years, showing up in board presentations, trade policy discussions, and vendor pitches with enough frequency that its meaning has started to blur.

Here is a clear definition and an honest assessment of where the strategy holds up and where it does not.

The Basic Concept

Friendshoring means shifting your sourcing and supplier relationships toward countries that share your government's trade agreements, regulatory standards, and political values. The goal is to reduce the risk that a sudden policy change, sanction, export restriction, or border closure will sever your supply chain without warning.

It is worth distinguishing friendshoring from two related terms that often get conflated with it:

Nearshoring is about geography: moving production or sourcing closer to your end market to reduce transit time, improve inventory responsiveness, and shorten the supply chain.
Reshoring is about bringing production back to your home country entirely, typically to gain control, reduce dependence on foreign suppliers, or respond to political pressure.

Friendshoring is about neither of those things. You can nearshore to a country that is politically hostile. You can reshore and still be dependent on foreign-sourced components. Friendshoring is specifically about political alignment and trust between trading partners.

Why It's Become Urgent Now

The World Economic Forum's Global Risks Report 2026 ranked geoeconomic confrontation, which includes tariffs, sanctions, and investment screening, as the most significant near-term risk facing the global economy.

That ranking reflects a world in which the predictability of trade relationships has declined materially. Organizations that built supply chains around the assumption that low-cost sourcing from any country was equally reliable have discovered, through several years of hard experience, that geopolitical alignment matters in ways that did not previously show up in landed cost calculations.

The Russia-Ukraine war created immediate supply disruptions for European manufacturers who had sourced materials, components, and energy from Russian suppliers. U.S. semiconductor export controls have complicated supply chains for companies operating across the U.S.-China divide. The Iran conflict has introduced fresh uncertainty into Middle Eastern sourcing relationships.

Where Friendshoring Delivers

The clearest benefits of a friendshoring strategy appear in specific circumstances. Organizations operating in regulated industries, where supply chain provenance is subject to government audit or customer expectation, gain genuine compliance value from sourcing within trusted jurisdictions.

Defense contractors, pharmaceutical manufacturers, and critical infrastructure operators face explicit requirements in this direction in many markets.

For organizations with high exposure to categories where export controls are expanding, such as semiconductors, advanced materials, and dual-use technologies, friendshoring within allied country networks reduces the risk of sudden supply disruption from a new restriction.

And for organizations that have experienced actual supply disruptions from geopolitically exposed sourcing relationships, the insurance value of diversifying toward more stable partners is real and demonstrable.

Over time, friendshoring proponents argue, the cost equation also improves: more predictable landed costs, fewer supply chain emergencies, and reduced exposure to sudden tariff swings more than offset the higher unit costs that often come with sourcing from higher-wage, politically stable countries.

The Reality Check

Here’s the problem. Supply chains built over decades around specific geographic clusters of expertise and infrastructure cannot be rebuilt in a planning cycle or two.

There is also the issue that "friendly" countries change. Trade agreements get renegotiated, governments change, and global perceptions of the U.S. are in a state of flux. The USMCA, which many U.S. organizations treated as a permanent foundation for North American sourcing, has been under formal review and renegotiation pressure throughout 2025 and 2026.

An organization that friendshored aggressively into Mexico on the assumption of permanent tariff-free access has discovered that "friendly" is a dynamic category.

Finally, many of the categories where companies want to friendshore lack sufficient supplier capacity in the preferred jurisdictions. You cannot friendshore semiconductor wafer fabrication to a country that has no fabs. The CHIPS Act investments in U.S. domestic semiconductor capacity are a deliberate attempt to solve exactly this problem, but the new fabs are years away from volume production.

The Practical Approach

Start with your highest-risk categories, not your largest spend. Friendshoring makes most sense in categories where a geopolitical disruption would be hardest to recover from, not necessarily where you spend the most. Map your supply chain vulnerabilities by potential disruption severity before deciding where to invest in re-sourcing.
Treat it as diversification. The most resilient approach is spreading sourcing across multiple geographies rather than moving all volume from one concentrated region to another.
Build supplier qualification capacity into your planning. Moving to a new sourcing geography requires real investment in supplier development, auditing, and qualification. That resource cost needs to be in the business case alongside the landed cost comparison.
Monitor the political environment in your "friendly" countries actively. Friendshoring is not a set-and-forget strategy. The geopolitical relationships that make a country a preferred source today can change, and procurement teams need to track leading indicators of trade relationship risk the same way they track commodity prices.

📰 In Other News...

Keeping a pulse on the industry.

Ocean Freight Has Quietly Become a Crisis Again
While most of the supply chain conversation this year has focused on tariffs and the Iran conflict, container freight rates have been staging a surge that has caught many importers off guard. The Drewry World Container Index reached $4,639 per 40-foot container in mid-July 2026, up 61 percent year-on-year.

On the transpacific route, which carries the bulk of goods moving from Asia to the United States, spot rates from Shanghai to Los Angeles have climbed more than 120 percent since mid-May alone, reaching around $6,500 per 40-foot container. Rates from Shanghai to New York are running near $8,000.

The Asia-to-Europe corridor has seen similar moves, with rates to the Mediterranean passing $7,000. Several factors are stacking simultaneously

Peak season demand arrived weeks earlier than normal as importers front-loaded shipments ahead of the July 24 U.S. tariff deadline and anticipated General Rate Increases
Port congestion at major hubs in South Asia, the Far East, and Europe is reducing effective capacity
Equipment shortages across China and Southeast Asia are limiting container availability
The residual uncertainty around the Strait of Hormuz, despite partial reopening, continues to support elevated rates on Middle Eastern lanes.

Carriers have implemented Peak Season Surcharges aggressively, with HMM's $3,000 per 40-foot container surcharge taking effect in mid-July among the most prominent.

USMCA Survives, but North American Trade Uncertainty Is Not Over
The trilateral trade agreement between the United States, Mexico, and Canada will remain in place until at least 2036, following the July 1 review deadline that earlier in the year looked like a genuine breaking point.

Supply Chain Dive reported that all three countries will continue negotiating potential adjustments to the framework rather than triggering a formal withdrawal process. For procurement teams, that is better news than the worst-case scenario that some trade analysts had flagged, particularly for organizations sourcing beef, auto components, agricultural products, or manufactured goods across the North American borders.

The caveat is that "continuing to negotiate" is not the same as stability. The relationship between the U.S. and Canada remains strained, and the Trump administration has consistently used trade policy as a lever in broader political negotiations.

🤖 AI Procurement News

Artificial intelligence shaping the industry.

Most Teams Are Still Not Ready For Procurement Agents.
Agentic AI systems, which set goals, break them into tasks, and execute end-to-end workflows without waiting for human input at each step, are moving from pilot programs into production deployment.

An agent can identify a supply shortfall, shortlist pre-approved vendors from a marketplace, generate an RFQ, compare bids against specification requirements, route the resulting recommendation for human approval, and log the completed transaction, all without a human initiating or managing each step.

Supply chain management software with agentic capabilities is projected to grow from under $2 billion in 2025 to $53 billion by 2030. Gartner forecasts that 90 percent of B2B procurement will be managed by AI agents within three years.

However, there is a notable gap between those forecasts and current reality. Despite AI adoption in procurement reportedly reaching 94 percent in terms of experimentation, only 12 percent of organizations have moved agentic capabilities beyond pilots.

💫 Resources from Una

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The Sidekick #031 | Ore You Kidding Me?