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After a strong rally, copper prices now face an awkward predicament — the widening gap between bullish financial market sentiment and weakening physical fundamentals. Macquarie Bank, in its latest commodities research report, states bluntly that the current copper price rally has clearly run ahead of reality.
As of midday trading in New York on July 9, copper was changing hands at $6.27 per pound, equivalent to just above $13,800 per tonne, up 2.6% on the day. The immediate catalysts driving prices higher included a pullback in oil prices (following Trump’s remarks that Iran is back at the negotiating table) and fresh US tariff threats — with the Commerce Department planning to expand tariffs of up to 50% to a wider range of downstream copper products by the end of fiscal 2026.
Macquarie, however, argues that these short-term factors are insufficient to support current price levels. In its latest report, the bank’s analyst team points out that the world is not short of copper, and that surplus supply over the coming years will ensure the market does not face any shortage risk for quite some time.
Inventory data provides the most direct evidence. Global visible copper stocks have risen by more than 870,000 tonnes since the start of 2025 — up 444,000 tonnes in 2025 and a further 429,000 tonnes so far in 2026. LME inventories stand at eight-year highs, while Comex stocks have reached unprecedented levels. Macquarie estimates that another 550,000 tonnes of copper is sitting off-exchange in the United States. Large volumes of metal have been drawn across the Atlantic by the CME-LME arbitrage spread, as traders position around potential US trade measures on copper. The bank believes the most likely outcome is continued uncertainty in the near term, rather than a clean resolution — keeping metal locked in the US while creating an artificial sense of tightness for the rest of the global market.
The demand side is equally discouraging. Chinese buyers have turned cautious at current elevated prices — despite lower imports and higher exports, China has experienced a large seasonal stock build, and the typical destocking process has stalled early. Demand outside China is also soft, with spot premiums well below annual contract levels.
On the supply side, while mine output continues to underperform — with guidance from the world’s top 17 miners cut by a cumulative 199,000 tonnes to 13.8 million tonnes, driven primarily by disruptions at Kamoa-Kakula and Grasberg, both of which have seen recovery and ramp-up schedules pushed back — this has not altered Macquarie’s overall supply-demand outlook. Kamoa-Kakula, operated by Zijin Mining, is expected to ramp up in the second half of the year, but its 2026 production guidance remains at 290,000–330,000 tonnes (well below the pre-flood expectation of more than 500,000 tonnes prior to May 2025). Freeport-McMoRan, after the mudflow incident, is targeting 771,000 tonnes at Grasberg this year, with full production not expected until the end of 2027. Macquarie has incorporated both disruptions into its models, projecting mine supply growth of 1.3% this year and 4.4% in 2027. The bank also assumes that Cobre Panama will restart in the second quarter of 2027 and ramp up to 385,000 tonnes per annum over six months.
Macquarie has cut its 2026 global copper demand growth forecast from 2.0% to 1.8%, with China slowing to 1.1% and ex-China growth reduced to 2.6%. Demand growth is expected to recover to 2.2% in 2027, but China’s moribund property market remains a drag.
Regarding AI-driven copper demand, the bank takes a cautious view. Data centres have certainly fuelled bullish sentiment, but project delays stemming from growing public opposition, grid constraints, equipment shortages and the increasing use of optical connectivity mean the actual copper impact may be smaller and slower than the market assumes.
Over the long term, Macquarie remains structurally positive on copper. The bank forecasts mine supply growth of 2.8% per annum from 2025 to 2030 and refined production growth of 2.4%, while demand — driven by electrification and the energy transition — grows at 2.8% per annum. By 2030, the market should move back toward balance, meaning new projects will still be needed.
But the near-term problem is the surplus. Macquarie estimates the market was already in a 600,000-tonne surplus last year and expects another 262,000-tonne surplus in 2026 (even after allowing for 783,000 tonnes of supply disruptions). For 2027 and 2028, the annual surplus is expected to average more than 700,000 tonnes.
Based on price momentum and macro support, Macquarie has raised its average 2026 copper price forecast to $13,165 per tonne from $12,310 previously. However, the bank still expects a market correction, forecasting a price floor of $11,000 per tonne in the third quarter of 2027. It also raised its long-term copper price forecast (in 2025 dollar terms) to $10,200 per tonne.
In summary, Macquarie’s assessment is clear and prudent: copper’s long-term story remains intact, but the market has overheated in the short term, and a correction appears inevitable. For investors, staying clear-headed at current levels is essential — when financial market exuberance decouples from physical fundamentals, returning to rationality and patience may be the wiser course of action.
