Copper traded at record territory this week before easing as the acute LME physical squeeze began to unwind. The market remains exceptionally tight, but pricing is being shaped as much by tariff positioning, exchange-stock movements and geopolitical disruption as by underlying demand.
Market Overview
COMEX September copper reached an all-time high of US$6.7775/lb (US$14.94/kg; US$14,940/t) on Wednesday 26 August, after Tuesday’s record settlement of US$6.7140/lb. LME three-month copper touched US$14,251/t, just below January’s record of US$14,527.50/t.
By Thursday 27 August, COMEX had eased about 1.6% to around US$6.58/lb (US$14.51/kg; US$14,507/t) as fresh deliveries into LME warehouses helped relieve the immediate shortage. Cash-to-three-month backwardation, which had blown out beyond US$500/t intraday at the peak, narrowed to about US$127/t by Tuesday’s close.
A firmer US dollar and profit-taking also weighed on prices into the weekend. Even so, copper remains up more than 47% year-to-date, underscoring that the market has only marginally loosened.
Macro Issues
Geopolitical disruption remains a direct force on copper fundamentals. The Iran conflict has disrupted roughly half of global sulphur supply, a critical input for SX-EW cathode production in Chile and Peru, while longer Cape of Good Hope routings are adding an estimated 20–30% to freight costs on affected trades.
The Democratic Republic of Congo’s concentrate export ban, in place since June, continues to remove a significant volume of material from seaborne markets. In Indonesia, PT Smelting’s Gresik plant, offline since 8 August for furnace repairs, is still withholding about 342,000 tonnes of annual cathode capacity.
Chile also remains below expectations, with production stuck near 5.5 million tonnes against a 6-million-tonne target. Antofagasta has cut 2026 guidance by 5%, while Codelco has pushed its Andes Norte expansion to 2029.
Analysts are increasingly describing this as an accelerating deglobalisation of critical-minerals supply chains, in which exchange stock movements reflect trade-policy positioning as much as physical scarcity or genuine demand growth. That distinction matters, because it suggests current prices are being driven by both real tightness and policy distortion.
Macro and Regional Themes
The unresolved US Section 232 decision on refined cathode remains the main near-term swing factor. Washington missed its 30 June deadline, but imports have continued because the premium for US copper over London prices keeps the arbitrage open.
July brought more than 200,000 tonnes of copper into US ports, the largest monthly inflow since IHS Markit records began in 2014. COMEX registered stocks have now climbed past 675,000 tonnes, up roughly eightfold since February 2025 after 46 consecutive daily builds.
Reports continue to circulate around possible duties of 15% from January 2027, rising to 30% from 2028, though nothing has been confirmed. As a result, the COMEX-LME spread is increasingly being read as a measure of tariff risk rather than a pure fundamentals signal.
China’s demand indicators are softening. Cathode rod operating rates fell to 58.89%, down 3.67 percentage points week-on-week, while the Yangshan import premium narrowed as elevated domestic prices curbed buying appetite. Australian and Chilean producers nonetheless continue to benefit from strong US-dollar copper prices, with the firmer US dollar adding a further currency tailwind.
Prices: Supply and Demand
Analyst forecasts remain widely dispersed, and for good reason: every price view is highly sensitive to tariff timing, US stockpiling and the durability of current supply disruptions.
| Source | 2026/27 price view | As of | Basis |
|---|---|---|---|
| Goldman Sachs Research | US$13,735/t (YE 2026); about US$13,800/t (2027 average) | Jun 2026 | Lower mine supply and higher US stockpiling assumptions |
| Wood Mackenzie | US$13,200–13,800/t | Mid-2026 outlook | Higher supply-disruption assumptions |
| UBS | US$14,000/t (Sep 2026); US$15,500/t (Jun 2027) | Aug 2026 | Persistent supply risk, falling inventories, widening deficit |
| Morgan Stanley | No single point target; deficit-led bull case | Aug 2026 | Forecast 2026 deficit of about 600,000 tonnes |
| Citi | US$14,500–15,000/t (12-month) | Aug 2026 | Bullish on tariff-driven tightness |
| Fitch Solutions | US$12,500/t (2026 average); US$11,000/t (2027 average) | 2026 | More conservative; expects surplus to reassert |
| CRU | Revised from +639,000t surplus toward balanced/deficit | Aug 2026 | Sustained import pull may produce a deficit in reality |
| ICSG | About 150,000t deficit in 2026 | 2026 | Balance view has shifted with import and stockpiling data |
The spread between Fitch’s relatively conservative forecast and Citi’s more bullish 12-month view highlights just how policy-sensitive this market remains.
Supply and Demand Outlook
Structural tightness on the mine-supply side remains intact. Treatment and refining charges are at or below zero, and Antofagasta has reportedly agreed zero processing charges with a Chinese smelter for 2026, squeezing smelter margins and prompting output cuts where concentrate cannot be processed economically.
Higher prices are lifting capital spending, but new supply from major projects such as Grasberg and Kamoa-Kakula is not expected to reach full capacity before 2028. Near-term supply relief therefore remains limited.
On the demand side, this year’s large exchange-stock builds still look more like tariff-driven stockpiling than a genuine acceleration in consumption, particularly with Chinese fabrication indicators softening. The practical read-through is straightforward: copper remains structurally tight, but current prices are being amplified by policy uncertainty, stock positioning and geopolitical disruption. Until Washington rules on refined-copper tariffs, volatility is likely to remain high.
ConnectOre
ConnectOre is ICAA’s digital knowledge platform, bringing together technology, research and practical industry insight from across the copper value chain. It supports collaboration on issues including zero-emission mining, processing efficiency, automation, water, tailings and sustainability themes already moving to the centre of sector strategy.
In the current market, that role is increasingly relevant: operational knowledge and technology adoption matter more when supply chains are tighter, costs are rising and project execution risk is increasing.
Go to: connectore.org
Sources
Australian Financial Review; Financial Times; The New York Times; The Economist; Reuters Commodities; Bloomberg Commodities & Metals; CNBC; CRU; Wood Mackenzie; ICSG; Goldman Sachs Research; Morgan Stanley Research; UBS; LME; COMEX; Trading Economics; MINING.com;
