Copper prices may have more upside room in 2026

In recent weeks, there has been intense debate about the outlook for the copper market in the second half (H2) of 2025. In terms of supply, new production facilities are gradually coming online. However, this process may not reach a level sufficient to flood the market with supply anytime soon. According to mining.com, the International Copper Study Group (ICSG) forecasts that global mine copper production will increase by approximately 2.3% to over 23.5 million mt in 2025, driven by increased output from several large projects. Mines such as Kamoa-Kakula in the Democratic Republic of Congo (DRC) and Oyu Tolgoi in Mongolia are ramping up production, along with a wave of smaller projects from Africa to Asia that are also increasing output.

Meanwhile, refined copper production is expected to jump by nearly 3% this year as smelters expand their capacity, particularly in China. On the surface, this sounds bearish for prices, as more metal supply should alleviate shortages. The ICSG's latest semi-annual forecast indicates a surplus of 289,000 mt in 2025, more than double the surplus of the previous year. If this forecast materializes, it will mark the third consecutive year that supply has exceeded demand, which is clearly a factor in price pressure.

Despite this, physical copper supply continues to encounter bottlenecks.

Not all copper is created equal, and the output from many new mines is in the form of concentrates, which still require smelting. A shortage of concentrates has pushed treatment charges for smelters into negative territory, an unusual situation indicating that smelters are scrambling to secure raw materials.

Among other factors, the shutdown of the massive Cobre Panama mine last year exacerbated the tightness in concentrate supply. ICSG analysts note that while refined copper production is currently increasing, the concentrate shortage could actually lead to a 1.5% decline in refined copper production by 2026, unless scrap recycling surges.

**Is the US Stockpiling Copper?**

All these factors together create a paradox in the current outlook for the copper market. Theoretically, copper supply is adequate, but it is not always available in the right form or in the right location. This is the main reason why traders remain bullish. As Trafigura and others have pointed out in recent years, decades of underinvestment have left few large mines capable of meeting future demand growth. And because trade policies have effectively redistributed a significant portion of global copper inventories, localized shortages can occur even when global supply appears adequate.

The ICSG acknowledges that new "demand drivers such as energy transition technologies and data centers" will absorb significant amounts of copper, helping to offset the impact of a slowdown in manufacturing.

For buyers, the key is to observe supply dynamics at the regional level. Notably, inventory at CME (US) warehouses has surged to its highest level since 2018, while inventory at the Shanghai Futures Exchange has declined to multi-year lows.

This reflects that copper is being shipped to the US ahead of tariff imposition. If tariffs are implemented and US purchases cool down, inventory will flow back. However, if trade barriers persist, foreign markets may tighten. Such headwinds imply that global supply is not as simple as a single surplus figure on paper.

**Outlook for the Copper Market: Volatile, with Upside Potential**

Looking ahead to H2 2025, most experts anticipate continued price volatility rather than a one-way trend. The consensus among senior analysts is that copper prices will "tread carefully" in the coming months, neither plunging nor surging, but continuing to fluctuate rapidly in response to news developments.

The latest commodity survey indicates that copper prices will average $9,500 per mt (approximately $4.50/lb) this year, slightly higher than the 2024 average. In practice, this means prices will hover between $4.40 and $4.50 per lb in H2. For many manufacturers, this is a manageable level, albeit significantly lower than previous peaks.

**Some Expect More Upside Room in the Copper Market**

However, there are views that copper prices could break out to the upside. Analysts at Deutsche Bank point out that if the global economic recovery (particularly outside China) gains momentum, it "could drive prices higher in H2 2025," potentially pushing prices above $10,000 per mt by 2026.

The resolution or easing of the US-China trade dispute would be another bullish catalyst. Many experts believe that the elimination of tariff concerns could unleash pent-up demand and narrow the price gap between the East and the West. On the other hand, escalating trade conflicts or an economic recession would pose downside risks. For instance, Cochilco warns that if the current weak economic conditions persist or worsen, their copper price forecasts will be further revised downward.