Period of elevated copper prices overextended: analysts

Copper is taking analysts by surprise: as recently as LME Week in mid-October, they saw its price, then near $11,000/metric ton, as excessive. Since then, the LME copper benchmark has gained more than $2,410/mt, and market observers now insist that the period of elevated prices has been overextended.

"Copper and really all metal prices are being driven by global uncertainty brought on by US Government actions [that] have caused a huge increase in copper flows to the US, not due to demand, but for inventory stocking," Ken Hoffman, Global Commodity Strategist for Toronto-based Red Cloud Securities, told Platts, part of S&P Global Energy, referring to the implementation of 50% tariffs on US imports of semi-finished copper products, starting in August, and the announced intention to impose tariffs on unwrought copper imports beginning in 2027.

COMEX inventories now stand at more than 503,000 mt, from less than 100,000 mt a year ago, according to Hoffman.

He and other analysts also pointed to the impact of supply disruptions; in 2025, their number was higher than average, with some of the biggest mines experiencing production issues.

The LME copper benchmark has been setting records since the end of October, when it surpassed its previous high of around $11,000/mt achieved in May 2024. Since then, prices have climbed rapidly, breaking $12,000/mt on Dec. 23, almost touching $13,000/mt on Jan. 5, and reaching $13,238/mt the following day.

"We're very much of the view that the copper price is unsustainable," Natalie Scott-Gray, senior metals analyst at financial services company StoneX, told Platts. "It has jumped so quickly, running away from the realities of the impact of [US] tariffs, the macro environment, and even the fundamentals."

The price surge was fueled by concerns about material shortages outside the US and interest from speculative money; however, these drivers are losing momentum, while risks in the macroeconomic environment, which copper has been largely ignoring recently, persist.

"Traditionally, when there is heightened geopolitical tension, such as the US' military operation in Venezuela or the Russian war [in Ukraine], copper prices would come off because it creates a risk-off mode," said Scott-Gray.

Too much material for demand

The copper market has been overreacting to one such risk, though, and remains focused on the outcome of June 30 -- the deadline for the executive order on a 15% tariff on refined copper imports into the US.

"The expectation of last year was that we were going to have them," said Scott-Gray, adding that UNCOMTRADE data shows that 890,000 mt of copper was shipped to the US in the first seven months of 2025, as a result.

However, the feedback that the Donald Trump administration received from all major producers, combined with the excessive copper inventory in the US, argues against imposing tariffs.

"It's difficult to say when exactly copper prices will come off, but we don't see that they are going to stay at this level for a number of reasons," she said.

The arbitrage between COMEX and LME prices no longer supports the pull of new copper material to the US, and the speculative positions appear overextended, she said.

"If we look at LME positioning, the net long is in its 80th percentile to the upside, so approaching record levels. When we have very stretched net positions, the price and momentum in the market can shift very quickly," explained Scott-Gray.

StoneX forecasts copper prices averaging $11,490/mt for 2026, a level still considered high, and Scott-Gray pointed out that while the LME is more bullish on copper than it has been since 2024, traders in China are bearish, with net short positions on the Shanghai Futures Exchange at their widest since 2021. "We have completely opposing market views on the future of copper, which often means that the specs in the West have gone too far," she said.

Scott-Gray also believes that the current price level is neither justified by a deficit on the concentrate market, estimated at 500,000 mt both last year and this year, nor by the refined copper deficit, which is expected to double from 174,000 mt in 2025 to 333,000 mt this year. "We don't see a deficit of 333,000 mt as hugely out of balance, remaining well below 2% of demand," she said.

No dramatic demand growth in 2026

While fundamentals are not weakening in 2026, downstream demand in China -- the largest market, accounting for 58%-60% of all copper -- is already being hurt by high prices, as evidenced by the dramatic decline in China's import premium, according to Scott-Gray.

"Demand within transport, construction, power and home appliances sectors in China, collectively accounting for 81% of the offtake, will inch up by 0.7% this year, so effectively staying flat compared to 2.6% growth last year," she said.

"There will be recovery in the advanced economies, but that's because we've had negative growth in Japan, the US and Europe. So in 2026, we expect global demand to increase by 2.3%, down from 4.1% in 2025," said Scott-Gray.

For the same reasons of slowed economic growth and the conclusion of large copper inventory pulls, Red Cloud Securities' Hoffman sees even a slight surplus for copper in 2026.

"Global demand for copper is slowing, the Chinese and US economies have been slowing for some time, and we believe that the chance of a recession in the US in 2026 is higher than analysts anticipate," he said, adding that until its infrastructure begins to take hold later in the decade, the AI industry is not going to have a significant influence on demand at least until 2027.

Russian base metals producer Nornickel also expects the market to be in a minor surplus. It estimates global refined copper production at 27.7 million mt and demand at 27.6 million mt in 2025, implying a surplus of 117,000 mt, and forecasts a similar surplus of 118,000 mt for 2026, with demand potentially rising to 28.4 million mt, and supply reaching 28.3 million mt, according to its Dec. 15 outlook.

Defying prohibitive interest rates

While uncomfortable for end-users, the surge in copper prices has created an incentive for miners and explorers. Many reported discoveries, brownfield expansions and other growth opportunities in 2025, even in high-interest-rate environments and locations where copper had not been mined for an extended period.

One example is Oman, where copper mining is being revived after decades of neglect. In Russia, where industrial investment activity has been stifled by sanctions and the country's prohibitive cost of capital, copper projects and acquisitions continue to secure financing.

Copper projects announced in 2025: