Copper pulled back from a three-week high on Wednesday after US inflation data put a Federal Reserve rate hike this month back on the table, and word of a preliminary deal to avert a strike at BHP’s Escondida, the world’s largest copper mine, took some of the supply premium out of the price.
Comex copper for December delivery traded at $6.6695 a pound (about $14,704 a tonne) late morning in New York, down 0.8%, after touching $6.7890 earlier in the session. The most-active contract’s record settlement of $6.89 was set on September 9, the day before a report that the White House tariff plan had stalled knocked more than 5% off the price.
In London, three-month copper climbed as far as $14,700 a tonne, its highest since September 23, before easing to $14,532 by early afternoon. Cash copper settled at a record $14,822 on Monday and $14,741 on Tuesday, and LME inventories have fallen for seven straight sessions to 229,650 tonnes.
US consumer prices accelerated in September on a surge in gasoline costs, and the CME’s FedWatch tool put the odds of a quarter-point hike at the Fed’s late-October meeting at about 44%, double the day before, Reuters reported. New York Fed President John Williams said he still sees one more hike this year.
Two sources told Reuters that Escondida’s supervisors’ union and the company had reached a preliminary agreement, which members were voting on Wednesday morning, and a union leader told Bloomberg a deal was “virtually done”. Unions at Antofagasta’s Centinela returned to talks on Tuesday after a week-long stoppage, while the open pit at Codelco’s El Teniente remains shut after a deadly landslide.
Copper’s 2026 advance has forecasters raising their numbers for the second time in three months, and with the metal averaging $13,471 a tonne for the year to date, the 2026 revisions mostly bring the sheet into line with the tape.
Macquarie now has copper averaging $13,573 this year, BMO Capital Markets $13,619 and BMI, a unit of Fitch Solutions, $13,500, up from the $12,700 it moved to in July. The differences open up from next year, and they come down to how much of the 1.5 to 2 million tonnes of copper now sitting in the United States is counted as surplus.
“The great copper gamble”
Macquarie, which in July called the rally “running ahead of reality”, has lifted its 2027 average by 14% to $12,750 and pushed the cycle low to $12,000 in the fourth quarter of next year from $11,000 a quarter earlier, while its long-term price rises to $10,500 a tonne in 2025 dollars.
Prices “have disconnected from the fundamentals and could arguably move higher or lower depending on the outcome of the Section 232,” the bank’s strategists write in a quarterly compendium whose copper chapter is headed “The great copper gamble”, listing the metal among its preferred commodities for the next six to nine months “but very binary”.
The fundamentals as Macquarie counts them are a 223,000-tonne surplus this year after a 531,000-tonne disruption allowance, and surpluses averaging more than 700,000 tonnes a year from 2027 as mine supply grows 4.9% next year and 4.3% in 2028, with Collahuasi, Grasberg, Kamoa-Kakula and Centinela ramping up, Tia Maria starting and Cobre Panama back in full from mid-2027.
Global demand growth slows to 1.5% in 2027 on its numbers, with none at all in China, where construction-related copper use is shrinking 9% a year and air conditioner makers are “again looking at aluminium substitution.”
Visible stocks worldwide are up 300,000 tonnes this year, but that is the US build; everywhere else they are down 168,000 tonnes, and Macquarie says sentiment will not turn until LME and Shanghai inventories start rising again, either quickly on a tariff decision or gradually as its forecast surpluses feed through.
Macquarie’s four tariff scenarios run from a January 1 that passes with no announcement at all, which it rates most likely, to a definitive decision against a duty, which it rates least likely: “the CME price will most likely collapse, taking the LME price with it, and the arb will invert,” with surplus US stocks reappearing in LME warehouses in the US and Asia.
A tariff announced six to eight weeks ahead of implementation would pull a last wave of metal into the US and leave the rest of the world “very tight”, while a formal six-month delay would see the spread fade as it did for platinum and palladium after the critical minerals decision.
Expectations are also growing that a scrap export ban will be folded into any decision; an immediate ban would take about 600,000 tonnes a year of contained copper off the world market.
“Has the market misread US inventory?”
BMO Capital Markets arrives at a very different place from a similar starting point. Its quarterly price deck, published two days before Macquarie’s, raises its long-term copper price by 47% to $16,000 a tonne in real terms, or $18,000 nominal by 2030, with $14,675 for 2027 and $16,000 for 2028, and the bank puts itself 46% above consensus on the long-term number. Its market balance is close to balanced throughout: an 83,000-tonne surplus this year, then small deficits from 2027.
The argument turns on what the US hoard, now close to 2 million tonnes on BMO’s estimate, or about a year of American consumption, actually represents. China’s refined copper imports have run below trend and its exports above trend since the tariff trade began, a cumulative swing of about 1.6 million tonnes on a net basis, which BMO reads as Beijing allowing its strategic reserve to run down while Washington built one.
“Instead of there being a build in above ground inventory over the last 2 years, there has been a geographical redistribution from ‘not visible’ to ‘visible’, meaning today’s price of ~$14,500-15,000/t is fundamentally supported,” the bank writes. Had China bid for metal alongside the US, “copper prices today would in fact be much, much higher,” and at some point China will want to restock.
BMO expects no tariff decision before the US midterms in November, which may see copper “pause for breath” and keep the Comex-LME spread narrow, but says investors it talks to are coming round to the view that the US stockpile “could simply stay in situ for many more years.”
Rising dependence on scrap, with China’s secondary refined output heading for 3.3 million tonnes this year from 2.8 million, is the other leg of its case: scrap is the marginal unit, and it only comes out at higher prices.
BMI sits between the two. It still views the rally “as having extended beyond what fundamentals alone would suggest” and has the market in a 43,000-tonne surplus this year, but has cut its 2026 mine supply growth forecast to 1.1% from 2.4% with Chilean output down 4%, and expects a deficit from 2027 that widens to 1.7 million tonnes by 2035 as demand grows 3% to 4% a year on grids, EVs and data centres. Its 2027 forecast is $12,900, rising to $15,000 in 2029 and an unchanged $17,000 in 2035. The International Copper Study Group, meeting this week, lifted its 2026 surplus to 104,000 tonnes and kept 2027 at 368,000 tonnes.
The arb has gone, the metal has not
The spread that built the US stockpile has all but disappeared on a spot basis. Comex October copper at $6.62 a pound trades below LME cash, which at Tuesday’s $14,741 works out to $6.69, and John Gross of The Copper Journal calculates the month-to-date average has flipped to an 85-point LME premium from a 17-cent Comex premium in June.
Most of that is London’s doing: the backwardation that put cash $164.50 over three months at Monday’s settlement, since narrowed to $115.50, reflects how little spot metal is left outside the US.
Aurubis, Europe’s largest copper producer, has offered customers a record premium of $347 a tonne for 2027 supply, 10% above this year’s level, Benchmark Minerals reported, and a company spokesperson told Bloomberg that “a lot of material has relocated to the US, leaving warehouses quite empty.”
Further down the curve the premium survives. December Comex at $14,704 a tonne sits about $170 over LME three-month, which Macquarie read at the end of September as the market pricing a 10% chance of a 15% duty (on Wednesday’s prices the same arithmetic gives about 8%).
That is too little to pull fresh shipments across the Atlantic, but enough to keep what is already there in place as long as the Comex curve pays traders to hold it. The tonnes still arriving are cargo booked months ago: Comex stocks rose another 6,500 tonnes last week to 713,000 tonnes, with 100,000 tonnes of African and South American copper due through October.
Deutsche Bank takes the stockpiling argument furthest. Daniel Ghali, the bank’s new head of metals research, told the Wall Street Journal that with China adding to its strategic reserve for decades and the tariff threat pulling metal into American sheds, the two countries could be sitting on 71% of the world’s supply by the end of the year. On that trajectory copper “simply won’t be available” to users elsewhere by the end of 2028, an outcome averted only by prices high enough to force substitution into aluminium.
He sees $10 a pound, or $22,050 a tonne, in the second quarter of 2027, almost 50% above current levels. Even a decision against tariffs may not free the metal, he told the paper, since the LME has warehouses in the US and copper may simply be shuffled between American sites rather than leave the country.
Gross points to copper’s premium over aluminium, which hit a record $5.08 a pound in September, more than double its July 2022 low. “Clearly, this rising premium cannot continue indefinitely, but who among us will step forward to say it’s at the top?” he writes. His September monthly report makes the longer point: China consumed 58.9% of the world’s refined copper last year, up from 12.4% in 2000. “There are too many copper eggs in China’s basket.”
Miners still pricing $5 copper
Copper producers fell with the metal on Wednesday, Lundin Mining down 3.9%, Freeport-McMoRan 3.7%, Southern Copper 3.3% and Teck Resources 2.9%, but the year has been kind. Southern Copper is up 44.1% in 2026, taking its market value to $169 billion, with Glencore ahead 38.6%, BHP 38.0% and Freeport 37.4% at a $100 billion valuation. Teck has gained 36.1% and Anglo American 29.2%. Lundin has managed 13.0%, Antofagasta 7.5% with Centinela on strike, and First Quantum 3.0%.
RBC Capital Markets calculates that North American copper producers at 1.0 times net asset value imply a copper price of $5.03 a pound, from $5.98 for Freeport down to $3.96 for Ivanhoe Mines, against a futures price near $6.70. The group trades at 0.9 times net asset value, in line with its 10-year average.
Comex copper is up more than 18% in 2026.