Copper prices have pulled back from the January 2026 all-time high of $14,527/t as the market digests conflicting signals on supply-demand balances. The International Copper Study Group (ICSG) recently revised its 2026 outlook to a small 96 kt surplus, citing weaker demand growth and higher secondary output from scrap, while J.P. Morgan maintains a deficit view of ~330 kt for the year.
The key overhang is the US tariff decision expected by June 30. Market participants anticipate at least 25% tariffs on refined copper imports, which could accelerate flows into the US and further distort the COMEX-LME arbitrage. In 2025, tariff fears drove a surge of import activity, with Chilean copper exports to the US increasing 28% even as total Chilean exports fell 13%.
On the supply side, disruptions continue to constrain output. Grasberg in Indonesia has seen an estimated 35% reduction in its 2026 production outlook due to a tailings leak. Kamoa-Kakula in the DRC has faced seismic disruptions. Cobre Panamá, a 300-350 kt/year mine, remains closed since November 2023 with no restart agreement in sight.
Demand fundamentals show a mixed picture. Energy transition and AI data center construction provide structural tailwinds, with BloombergNEF projecting energy-transition copper demand could triple by 2045. However, Chinese demand growth has slowed to below 2%, and high prices are encouraging thrifting and substitution in downstream sectors.
Goldman Sachs Research forecasts LME copper averaging $10,710/t in H1 2026, with prices ranging $10,000-11,000/t for the year. Longer term, the bank sees $15,000/t by 2035 as grid and power infrastructure demand accelerates.
The pullback from January's record highs presents a potential entry point for phased hedging. Layer hedges on dips toward $11,500-12,000/t LME. Monitor the June 30 tariff decision closely — a 25% tariff would widen COMEX premiums and tighten non-US markets. Diversify supply sources across Chilean, Peruvian, and scrap-based suppliers to reduce single-jurisdiction risk.