Copper pulled back on Wednesday from a three-week high as stronger US inflation revived expectations of a rate increase this month, while a preliminary labor agreement at BHP’s Escondida mine eased concerns about a strike at the world’s largest copper operation. The two developments weighed on prices by reducing some of the supply-risk premium built into the market.
December copper futures on the Comex briefly reached $6.7890 a pound before falling to $6.6695, down about 0.8% and equivalent to roughly $14,704 a tonne. The benchmark contract set a settlement record of $6.89 a pound on Sept. 9, then dropped more than 5% in a day after progress stalled on the White House’s tariff plan.
Three-month copper on the London Metal Exchange rose as high as $14,700 a tonne, its highest since Sept. 23, before retreating to $14,532. LME cash copper set a record of $14,822 a tonne on Monday and remained elevated at $14,741 on Tuesday. LME inventories fell for a seventh consecutive session to 229,650 tonnes.
Inflation and mine talks shift near-term prices
US consumer prices accelerated in September as gasoline costs rose. CME Group’s FedWatch tool put the probability of a 25-basis-point rate hike at the Federal Reserve’s late-October meeting at about 44%, roughly double the previous day’s level. New York Fed President John Williams continued to say the central bank could raise rates once more this year.
On the supply side, members of the Escondida supervisors’ union were due to vote on a preliminary agreement Wednesday morning. The union leader said the deal was nearly complete. At Antofagasta’s Centinela mine, workers resumed negotiations Tuesday after a week-long stoppage. Codelco’s El Teniente open-pit mine remains shut following a fatal landslide.
Copper is therefore facing both interest-rate uncertainty and shifting mine supply. The reduced risk of an Escondida strike has pared back the near-term supply premium, but stoppages and labor talks elsewhere remain unresolved. Falling exchange inventories are also limiting the scope for a deeper price retreat.
Macquarie, BMO and BMI lift 2026 forecasts
Copper’s gains this year have prompted several institutions to revise their forecasts for a second time in three months. Prices have averaged about $13,471 a tonne in 2026, and the new estimates largely bring annual projections closer to levels seen in the market.
Macquarie expects copper to average $13,573 a tonne in 2026, BMO Capital Markets forecasts $13,619, and BMI, part of Fitch Solutions, raised its estimate to $13,500 from $12,700 in July. Their views diverge more sharply beyond 2027, in part over whether the roughly 1.5 million to 2 million tonnes of copper held in the US should be treated as a global surplus or as inventory relocated from elsewhere.
Macquarie raised its 2027 average-price forecast by 14% to $12,750 a tonne and lifted its expected next-cycle low to $12,000 from $11,000, with the trough projected for the fourth quarter of 2027. It also increased its long-term price estimate to $10,500 a tonne in 2025 dollars.
The bank says prices have moved away from fundamentals and that the outlook depends substantially on a possible US decision under Section 232 of the Trade Expansion Act. Its base case sees a 223,000-tonne copper surplus in 2026, including 531,000 tonnes of supply disruptions. From 2027, as mine output grows, annual surpluses could average more than 700,000 tonnes.
Macquarie forecasts global mine production growth of 4.9% next year and 4.3% in 2028. Higher output is expected from Collahuasi, Grasberg, Kamoa-Kakula and Centinela; Tia Maria is expected to start production, while Panama’s Cobre Panama mine could return to full capacity from mid-2027.
On demand, Macquarie expects global copper consumption growth to slow to 1.5% in 2027, with no growth in China. It estimates that copper use in China’s construction sector is falling by about 9% a year, while air-conditioner manufacturers are reconsidering the use of aluminum in place of some copper.
Tariff decisions could redirect US inventories
Macquarie estimates that visible global copper stocks have risen by about 300,000 tonnes this year, almost entirely because of stockpiling in the US. Inventories elsewhere have fallen by about 168,000 tonnes. A renewed rise in LME and Shanghai Futures Exchange stocks could signal a shift in market sentiment, whether prompted by a rapid return of metal after a tariff decision or by an expected surplus gradually emerging.
The bank outlined four tariff scenarios, including no decision before Jan. 1, 2027, and a final decision not to impose duties. If tariffs are ruled out, copper already shipped to the US could flow back to LME warehouses and Asian markets, potentially pulling Comex prices down quickly and dragging London prices lower.
If Washington announces tariffs six to eight weeks before they take effect, traders could keep sending copper to the US ahead of implementation, tightening spot supply elsewhere. A formal six-month delay could gradually narrow the spread between New York and London prices. The market is also assessing whether the US might include a ban on scrap-copper exports. If introduced immediately, such a move could remove about 600,000 tonnes of contained copper from annual global supply.
BMO sees a shift in inventory location, not a glut
BMO’s reading of the inventory build differs from Macquarie’s. The bank raised its long-term copper price forecast by 47% to $16,000 a tonne in real terms, equivalent to about $18,000 in nominal 2030 prices. It forecasts $14,675 for 2027 and $16,000 for 2028, with its long-term estimate 46% above market consensus. BMO expects a surplus of about 83,000 tonnes in 2026, followed by a modest deficit from 2027.
For BMO, the central question is whether the nearly 2 million tonnes held in the US represent a new global surplus or a redistribution of copper among regions. Since discussion of US tariffs intensified, China’s refined-copper imports have been below trend and exports above trend, producing a cumulative net shift of about 1.6 million tonnes. BMO interprets this as China drawing down strategic stocks while the US builds inventories.
Under that view, above-ground stocks have not truly increased over the past two years; metal has instead moved from less visible locations into warehouses in the US and elsewhere. That inventory structure helps support prices of $14,500 to $15,000 a tonne, the bank says. Prices could be higher if China were also buying heavily, though renewed Chinese stockpiling could change trade flows again.
BMO does not expect a US tariff decision before the midterm elections. Copper could consolidate in the meantime, with the Comex-LME spread remaining narrow. Some investors the bank has spoken with also believe US inventories may remain there for years rather than quickly returning to international markets.
Scrap is another factor in BMO’s view. With growth in mined copper supply constrained, scrap is becoming the marginal source of supply, and higher prices are needed to draw more material into the market. China’s secondary refined-copper output is expected to rise to 3.3 million tonnes this year, up from 2.8 million tonnes last year.
BMI’s outlook falls between the two. It still considers the price rally larger than fundamentals alone can explain and forecasts a 43,000-tonne surplus in 2026. But BMI cut its forecast for mine-supply growth that year to 1.1% from 2.4%, including an expected 4% decline in Chilean output. It sees a market deficit emerging from 2027 and widening to 1.7 million tonnes by 2035, with demand from power grids, vehicles and data centers growing 3% to 4% annually.
BMI forecasts copper at $12,900 a tonne in 2027, $15,000 in 2029 and $17,000 in 2035. The International Copper Study Group raised its 2026 surplus estimate this week to 104,000 tonnes and kept its 2027 surplus forecast at 368,000 tonnes.
Comex-LME premium narrows as spot tightens in London
The spot-price spread that helped draw copper into the US has almost disappeared. October Comex copper was around $6.62 a pound, below the roughly $6.69 implied by Tuesday’s LME cash price. John Gross of Copper Journal calculated that the average spread since October has turned in LME’s favor by 8.5 cents a pound; in June, Comex had traded at a 17-cent premium to LME.
Tightness in the London market has been a key factor. At Monday’s close, LME cash copper traded at a $164.50-a-tonne premium to three-month futures. That premium later narrowed to $115.50 but still pointed to limited deliverable spot metal outside the US.
Aurubis, Europe’s largest copper producer, has quoted customers a record premium of $347 a tonne for 2027 supply, 10% higher than this year. A company spokesperson said large volumes of copper had moved to the US, leaving stocks in other warehouses low.
The forward curve still includes some US premium. December Comex copper was equivalent to $14,704 a tonne, about $170 above three-month LME copper. Based on this spread, Macquarie estimated at the end of September that the market was pricing in about a 10% probability of a future 15% tariff; at Wednesday’s prices, its estimate was about 8%. The gap is too small to keep drawing new shipments across the Atlantic, but large enough to encourage metal already in the US to stay there.
Comex inventories rose by another 6,500 tonnes last week to 713,000 tonnes. An estimated 100,000 tonnes from Africa and South America are still due to arrive in the US in October, mostly on shipments booked several months ago.
Analysts disagree on the risks of concentrated stocks
Daniel Ghali, head of metals research at Deutsche Bank, offered a more aggressive estimate of the implications of concentrated inventories. China has accumulated strategic reserves for years, while the threat of US tariffs has encouraged shipments into American warehouses. Together, the US and China could hold 71% of global copper supply by year-end, Ghali estimates. If the trend continues, users elsewhere could struggle to secure enough spot metal by the end of 2028 unless prices rise enough to encourage substitution with aluminum.
Ghali expects copper could reach $10 a pound, or $22,050 a tonne, in the second quarter of 2027, nearly 50% above current levels. Even if the US ultimately imposes no tariff, he does not expect inventories to leave immediately: the LME has warehouses in the US, so metal could simply move between locations within the country.
Gross noted that copper’s premium to aluminum reached $5.08 a pound in September, more than double its July 2022 low. China consumed 58.9% of the world’s refined copper last year, up from 12.4% in 2000, underscoring how sharply the regional concentration of copper stocks and consumption has changed.
Copper miners retreat, but most remain higher for the year
Copper’s Wednesday pullback sent Lundin Mining down 3.9%, Freeport-McMoRan down 3.7%, Southern Copper down 3.3% and Teck Resources down 2.9%. Most copper miners are still up in 2026. Southern Copper has gained 44.1% to a market value of $169 billion; Glencore is up 38.6%, BHP 38.0% and Freeport 37.4%, giving Freeport a market value of about $100 billion. Teck has risen 36.1%, Anglo American 29.2%, Lundin 13.0%, Antofagasta 7.5% and First Quantum 3.0%.
RBC Capital Markets calculates that North American copper producers are valued at about one times net asset value at a copper price of roughly $5.03 a pound. The implied price is $5.98 for Freeport and $3.96 for Ivanhoe Mines, compared with futures near $6.70. Across the group, valuation is about 0.9 times net asset value, close to the average over the past 10 years.
Comex copper is up more than 18% in 2026. Whether prices can hold near current levels will depend on the US tariff decision, whether inventories return to other markets, the pace of mine-supply recovery and whether China rebuilds its strategic stocks.