Copper futures on COMEX settled at $6.28 per pound on July 12, climbing 1.08% from the previous session and reversing a slide that had taken the red metal to $6.05 — a two-week low — on July 8. The rebound tracked improving risk appetite across equity markets, with semiconductor and AI-linked stocks leading the recovery. LME three-month copper traded in the $13,800-$13,900 per metric tonne range, well off the all-time high of $14,690/mt ($6.67/lb) set in June but still up 13% year-on-year.
The headline price action masks a deeper supply-side story that has fundamentally reshaped the copper cost curve in 2026. Chile, the world's largest copper producer at roughly 5 million tonnes per year, produced just 399,950 tonnes in April — a 7.9% drop from March's 434,490 tonnes. The decline is not geological. It is chemical.
Sulfuric acid is the unsung workhorse of copper hydrometallurgy. Every tonne of copper produced via solvent extraction-electrowinning (SX-EW) requires roughly three tonnes of sulfuric acid. Chile imports about 37% of its sulfuric acid, with a significant portion historically flowing from Middle Eastern refineries through the Strait of Hormuz. The US-Iran conflict that escalated in mid-2026 disrupted those shipping lanes, and acid prices in Chile surged by over 100%. Canadian sulfur exports jumped 50% month-on-month in May as alternative suppliers scrambled to fill the gap, but logistics cannot substitute for geography. The cost of acid delivered to Chilean SX-EW operations has doubled input costs for roughly 25% of Chile's copper output.
This is not a problem that resolves quickly. Even if the US-Iran peace negotiations that resumed in early July produce a durable ceasefire, the sulfuric acid supply chain requires weeks to normalize. Tanker scheduling, port clearing, and smelter acid contracts operate on quarterly cycles. Any buyer modeling copper availability through Q3 2026 should factor in at least 150,000-200,000 tonnes of lost Chilean production — roughly 3-4% of annual global mine supply.
On the inventory side, combined LME-COMEX-SHFE warehouse stocks have been declining. LME copper stocks stand at 306,500 tonnes, down 1,250 tonnes in the latest session. SHFE inventories fell 2.2% week-on-week, signaling that Chinese physical demand — while restrained by record-high prices earlier in the quarter — is absorbing metal at current levels. The International Copper Study Group (ICSG) has not yet released its mid-year update, but the trajectory is consistent with a market that moved from a small surplus in Q1 to a deficit in Q2.
Demand signals are mixed but tilting constructive. Chinese factory activity returned to expansion in June, according to the Caixin manufacturing PMI. The country's State Grid Corporation announced a 10% increase in transmission infrastructure spending for 2026, which translates to roughly 200,000 additional tonnes of copper wire and cable demand. European manufacturing PMIs, while still contractionary in Germany, have stopped deteriorating. In the United States, a weak June jobs report has shifted market expectations toward Federal Reserve rate cuts beginning as early as September. Lower rates weaken the dollar and reduce financing costs for construction and capital equipment — both copper-intensive sectors.
The analyst community is divided on the near-term trajectory but unified on the medium-term thesis. JP Morgan expects LME copper to average between $9,800 and $12,500 per metric tonne through 2026 — a range that captures both the current pullback and the structural tightness. Goldman Sachs Research, while acknowledging near-term demand headwinds, maintains its $15,000 per tonne target by 2035, driven by electrification and grid investment. Trading Economics' consensus models point to $6.41/lb by the end of Q3 2026, implying roughly 2% upside from current levels.
The bull case rests on three pillars: sulfuric acid-driven supply losses that accumulate each week the Strait of Hormuz remains disrupted, a Fed pivot that reignites manufacturing and construction spending, and Chinese grid investment that provides a demand floor. The bear case centers on the US-Iran peace deal — if it holds — rapidly normalizing acid supplies, combined with the possibility that US rate cuts come too late to prevent a broader economic slowdown that crushes copper demand across multiple sectors simultaneously.
The base case, and the one most analysts are pricing, is a market that tightens gradually through Q3 and Q4. Supply losses from Chile are partially offset by increased output from the Democratic Republic of Congo, where the Kamoa-Kakula expansion continues to ramp. Demand growth moderates from 2025's pace but remains positive at roughly 2.0-2.5% globally. Inventories draw steadily, and prices grind higher into year-end, though the explosive rally of H1 2026 is unlikely to repeat without a major new supply disruption.
Copper buyers managing multi-million dollar annual spend need to shift from reactive spot purchasing to structured contracting before the window closes. The sulfuric acid bottleneck will not resolve before Q4 2026 — even under the fastest peace-track scenario. That means 150,000-200,000 tonnes of Chilean production is at risk, equivalent to roughly three days of global consumption. It does not sound like much, but in a market where visible inventories cover only about four days of demand, it is the difference between balance and deficit. Buyers with Q3 and Q4 delivery requirements should lock in fixed-price contracts now while the market is focused on the macro selloff rather than the micro supply story. For 2027 annual contracts, negotiate a collar structure with a floor at $12,500/mt and a ceiling at $15,500/mt — you get protection if the Goldman $15,000/t thesis materializes, while capturing downside if the macro picture darkens. Watch three triggers: the US-Iran ceasefire announcement (sell the news, not the event), SHFE weekly stock data every Friday (a sustained draw below 150,000 tonnes is a buy signal), and the Fed September meeting minutes (a dovish surprise tightens the copper market within 48 hours). This is not a market for quarterly hand-to-mouth buying.