Copper prices have exploded so far in August and could have further to run.
The copper price reached a record US$14,552 per tonne, or US$6.60 per pound, earlier this month due to a confluence of factors.
While the price has eased, it remains above US$14,100/t.
Copper mine production has continued to disappoint, the Democratic Republic of Congo announced an immediate ban on copper concentrate exports, and shipments to the US have surged ahead of a potential decision on refined copper imports.
This week, Lundin Mining (TSX: LUN) downgraded copper guidance following storms in Chile, while MMG (HKEX: 1208) paused its Las Bambas operation in Peru following two fatalities.
“Meanwhile, China’s Yangshan copper premium – an indicator of demand for imported copper – rose to US$115/t in July from around US$50/t at the start of 2026, before easing back to US$85/t this week,” UBS strategic Dominic Schnider said this week.
“Despite the pullback, the premium market remains elevated, signalling continued tightness in the physical market.”
UBS has raised its December 2026 copper price forecast by US$500/t to US$15,000/t.
“We forecast US$15,000/t for March 2027, US$15,500/t for June 2027, and introduce a new end-September 2027 forecast of US$15,500/t,” Schnider said.
UBS has narrowed its forecast 2026 copper deficit to 219,000 tonnes from 520,000t due to an upward revision in supply for 2025.
It expects the copper market deficit to widen to 379,000t, equivalent to 1.3% of global annual demand.
“Against this backdrop, we favour a long position in copper and would add on price pullbacks,” Schnider said.
The wildcard
Citi released its “wildcards” list for the current half.
Metals strategist Tom Mulqueen said an expanded push by governments to hoard critical minerals would push prices up.
“In copper’s case, the significant shift in global refined inventories to the US through 2025 and early 2026 came in response to feared S232 copper import tariffs, predicated on the US administration’s efforts to reduce import dependency for key minerals and incentivise domestic production,” he said.
He added that a push by import-dependent nations could tempt exporters to constrain supply for maximum economic and political gain.
Citi’s base case is that the increased capital allocated to critical minerals by Europe and the US could move the needle for smaller markets like rare earths but were less likely to have a significant impact on a larger market like copper.
Still, Citi’s wildcard scenario envisages escalating government concern around resource security, prompting further capital allocation to global stockpiling and material inventory builds.
Using copper as an example, Citi assumed a global refined copper inventory of 3 million tonnes, or roughly 1.3 months of global consumption.
For global copper inventory to rise to three months of consumption, Citi said the world would need to accumulate an additional 4Mt of inventory over two years.
“Historical elasticities imply that generating incremental material for this inventory build would require copper prices of up to circa US$23,000/t,” Mulqueen said.
In the meantime, Citi sees copper rallying to US$15,000/t later this year.