Copper Market at a Crossroads Between Investor Optimism and Supply Surplus
In its latest assessment of the copper market, Macquarie Bank announced that the recent price rise of this metal has been shaped more by investor optimism, trader positioning, and tariff uncertainties in the United States than by actual supply shortages; while inventory and demand data indicate a continued supply surplus in the short term.
According to a report by Ma’adan News, citing SteelHome, the price of copper on Thursday in New York trading rose 2.6% by around midday, reaching $6.27 per pound—a level equivalent to slightly over $13,800 per ton. The drop in oil prices following Donald Trump’s remarks about Iran’s return to the negotiating table, as well as new tariff threats in the US, have been cited among the factors supporting copper prices.
Meanwhile, the US Department of Commerce has announced that it intends to establish a process by the end of fiscal year 2026 to expand tariffs of up to 50% to a wider range of downstream copper products—an issue that has fueled uncertainty in this metal’s market.
According to the latest report from Macquarie’s strategy division, the copper market is now caught between investor optimism and weak physical fundamentals, and the gap between current prices and supply-demand realities is significant. The bank’s analysts, in a report titled “Spinning Several Plates at Once,” emphasized that the world is currently not facing a copper shortage, and given the forecast of a supply surplus over the next few years, the likelihood of a serious short-term shortage is low.
According to Macquarie’s estimates, visible copper inventories have increased by more than 870,000 tons since the beginning of 2025. Of this amount, 444,000 tons were added last year, and 429,000 tons have been added to inventories so far in 2026. LME warehouse inventories have reached their highest level in eight years, and COMEX stocks are also at unprecedented levels. The bank also estimates that approximately 550,000 tons of additional copper are held outside exchanges in the United States.
Macquarie states that the surge in copper prices from below $12,000 per ton in late March to over $14,000 per ton at the end of May was mainly driven by trader positioning, short covering, and tariff-related trade flows, rather than actual shortages in the physical market.
According to the bank, the arbitrage between the Chicago Mercantile Exchange and the London Metal Exchange has led to a portion of copper being transferred to the United States, as traders prepare for the possibility of new trade measures from Washington. Macquarie believes the most likely scenario is continued uncertainty rather than a clear resolution in the short term—a situation that keeps metal in the US and creates an artificial perception of shortage in other markets.
On the demand side, Macquarie has warned that Chinese buyers have stepped back at current prices. China, despite declining imports and rising exports, has faced significant seasonal inventory growth, and the usual inventory drawdown trend has stopped earlier than expected. Outside China, demand is assessed as weak, and cash premiums are below annual contract levels.
On the supply side, mine production continues to underperform expectations. Production estimates for 17 major mining companies have decreased by 199,000 tons to 13.8 million tons. Major disruptions have occurred at the Kamoa-Kakula and Grasberg mines, where recovery and ramp-up plans have been delayed. Ivanhoe expects increased production from its mine in the Democratic Republic of Congo in the second half of the year but has maintained its 2026 production guidance at 290,000–330,000 tons. Freeport-McMoRan now expects the Grasberg mine to return to full production by the end of 2027.
Despite these disruptions, Macquarie forecasts copper mine supply growth of 1.3% this year and 4.4% in 2027. The bank also assumes that the Cobre Panamá mine will resume operations in the second quarter of 2027 and reach an annual capacity of 385,000 tons within six months.
Macquarie has lowered its 2026 global copper demand growth forecast from 2% to 1.8%. China’s demand growth estimate has been reduced to 1.1%, while growth in markets outside China is projected at 2.6%. The bank expects demand growth to reach 2.2% in 2027, but China’s real estate market slump will remain a serious obstacle to consumption recovery.
The bank also expresses skepticism about a rapid increase in copper demand driven by artificial intelligence in the short term. Although data center development has bolstered optimistic sentiment in the market, project delays, public opposition, power grid constraints, equipment shortages, and the growing use of optical connections could make AI’s impact on copper consumption smaller and slower than market estimates.
Nevertheless, Macquarie assesses copper’s long-term outlook as still attractive. The bank forecasts that from 2025 to 2030, annual mine supply will grow by 2.8% and refined copper production by 2.4%, while demand will also increase at an average of 2.8%, driven by electrification and the energy transition. Accordingly, the market will move toward balance by 2030 and will still require new mining projects.
However, the main issue in the short term is supply surplus. Macquarie estimates that the copper market faced a surplus of 600,000 tons last year, and in 2026, even factoring in 783,000 tons of supply disruptions, a surplus of 262,000 tons will be recorded. The bank expects that in 2027 and 2028, annual supply surpluses will average over 700,000 tons.
Given price momentum and support from macroeconomic factors, Macquarie has raised its 2026 average copper price forecast from $12,310 to $13,165 per ton. However, the bank still expects a price correction and forecasts a price floor of $11,000 per ton for the third quarter of 2027. The long-term copper price forecast, based on 2025 dollars, has also been raised to $10,200 per ton.