Following January’s surge to record highs, copper prices have entered a more cautious phase, reacting closely to developments surrounding the Iran crisis. The ongoing closure of the Strait of Hormuz presents a paradox for the market, creating both upward and downward pressure on prices.
On one hand, the Gulf region is a key supplier of sulfur, a critical input for producing sulfuric acid used in copper extraction processes such as solvent extraction and electrowinning, which account for roughly a quarter of global refined output. Any disruption in supply supports higher prices.
On the other hand, rising energy costs linked to the crisis threaten to slow global manufacturing, weakening demand for copper. The longer the disruption persists, the greater the risk to consumption. This tension underscores the conflicting forces currently shaping copper markets. Supply constraints remain a concern, yet demand uncertainty is equally significant.
Prices on the London Metal Exchange, hovering around $13,000 per metric ton, suggest scarcity. However, high inventory levels in exchange warehouses and contango in forward pricing indicate ample supply.
Recent projections from the International Copper Study Group provide further clarity on this delicate balance. Global mine production grew by less than 1% last year, impacted by disruptions in major producing countries such as the Democratic Republic of Congo, Indonesia and Chile.
The group has since lowered its 2026 mine supply growth forecast to 1.6%. Limited availability of copper concentrates is also expected to restrict refined output growth to just 0.4%.
While these factors support bullish sentiment, demand expectations have also been revised downward. The International Copper Study Group reduced its global copper consumption forecast to 1.6%, citing weaker economic prospects tied to geopolitical tensions. As a result, the group now expects a modest supply surplus of a little over 90,000 tons this year, reversing earlier predictions of a deficit.
The market situation in 2025 provides important context. A significant supply surplus of over 450,000 tons, which is much higher than previously estimated, helped drive inventory accumulation.
Strong refined production growth, particularly in China, contributed to this oversupply. Chinese output alone rose by 9%, adding approximately one million tons. Much of this excess supply has flowed into global exchange warehouses, especially in the United States, where tariff-related premiums have attracted imports.
Although stock levels declined slightly in April due to seasonal demand in China, global inventories remain elevated at around 1.3 million tons.
Despite these fundamentals, investor activity continues to play a dominant role. While speculative enthusiasm has cooled since January, market participants still hold significant bullish positions. Ultimately, copper prices are being shaped as much by financial sentiment and geopolitical developments underlying supply and demand dynamics.
The current factors disrupting the copper market are likely to abate sooner or later, and the bigger picture of the accelerated energy transition and electrification will bring to the fore the supply limitations on the market. Exploration firms like Numa Numa Resources Inc. are banking on this big picture as they execute their operations.
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