Commodity markets have long been in the spotlight for investors. Recently, attention has focused on metals—specifically copper. At the root of this is the recent surge in its market price driven by the Democratic Republic of the Congo’s (DRC) ban on copper concentrate exports, “which exacerbated an already tight market situation,” according to UBS.
The firm highlights another destabilizing factor: copper production in Chile and Peru has continued to be “disappointing,” with cumulative year-to-date output down 4% compared to the same period last year, despite a 2% year-over-year uptick in June. “Weather-related disruptions in Chile and slow project ramp-ups have weighed on supply,” the firm notes.
Adding to these supply-side issues are pressures on the demand side. In this regard, UBS points to an increase in shipments to the United States ahead of a potential decision on refined copper imports as an additional source of tension, “which has drawn metal into the country, reshaped global trade flows, and drawn down inventories in other regions.”
Carsten Menke, Head of Next Generation Research at Julius Baer, notes that the White House “has remained very quiet on the topic of copper import tariffs, and President Trump’s apparent strategy of doing nothing is becoming increasingly evident to the market.” In this environment, the US “continues to import refined metal, depleting stocks in other regions and thereby pushing prices to historic highs.” On this point, Menke emphasizes that since there is no deadline for President Donald Trump to make a decision, “the trend is expected to continue in the short term.”
Is the Situation Sustainable?
Menke argues that the current market shortage “is artificial, not real,” suggesting that “prices should return to levels more justified by fundamentals over the medium term.” He explains that the US copper market review related to tariffs “should have been carried out nearly two months ago.” Until now, Menke continues, “the White House has maintained silence on the matter, suggesting that President Donald Trump has not yet made up his mind about imposing tariffs on refined metal imports.” The US is a major net importer of refined copper, primarily from Canada, Chile, and Peru. At the same time, it is a net exporter of ores and concentrates due to a lack of domestic smelting and refining capacity.
“Trump has the following options: import tariffs of 15% starting in January 2027 and/or 30% starting in January 2028; imposing no tariffs; or doing nothing. Doing nothing means leaving the copper market in limbo, which appears to be the president’s strategy right now. The result is that the US continues importing refined metal, which continues to accumulate as inventory,” Menke argues.
This situation drives price increases, which are further accelerated by very bullish positioning from short-term and speculative traders in US futures markets. “For once, Chinese traders appear to be sitting on the sidelines of the speculation,” says Menke, adding that because Donald Trump faces no deadline to act, “copper prices are expected to remain elevated, at least in the short term,” even though they should return to fundamentally justified levels over the medium term.
At UBS, analysts believe global copper demand remains supported by resilient economic activity, steady growth in China, and artificial intelligence-related investment across Asia—as copper, among other commodities, is used in cables, power systems for vehicles, and electrical grids, as noted by Aneeka Gupta, Director of Macroeconomic Research at WisdomTree. Therefore, “given that the market is likely to remain in deficit through the end of the year, price weakness should be limited,” leading the firm to maintain a constructive outlook on copper, expecting prices to hit their target of $15,500/MT in the coming quarters and recommending long exposure.
However, other firms see risks in this scenario. Bank of America notes that while investments in energy resilience will accelerate and supply constraints are expected to keep the market in deficit through 2026 and 2027, they also point out that metals demand in China has slowed and could grow by just 0.5% year-over-year in 2026—the weakest growth since 1988. Additionally, demand in Europe and the United States is slowing down due to the war with Iran.
As downside risks to copper prices, the firm points to the impact of trade wars on confidence, potential re-exports from China, and a “drastic slowdown” in global demand next year.
