Key industrial metal copper will likely continue its bullish momentum over the next few months on the Iran war leading to a sulphur shortage, supply-demand imbalance and the threat of US tariffs on the red metal.
“We have revised our 2026 average annual copper price forecast upwards to $13,500/tonne from $12,700 previously, reflecting tariff-driven distortions amplifying persistent supply-side tightness and reinforcing relentlessly bullish sentiment,” said research agency BMI, a unit of Fitch Solutions.
JP Morgan Global Research expects the copper price to reach $14,800 in the fourth quarter of this year, driven by sulphur shortages, tight mine supply, an industrial boom and the threat of US tariffs.
Up over 15% ytd
Australia’s Office of the Chief Economist (AOCE) said copper’s recent surge has been driven by mine disruptions and the resumption of the Congo’s copper concentrate export ban, limiting supply, combined with strong US copper import demand in recent months.
It expects prices to remain high through 2028 before easing to about $11,600 a tonne (real terms) by 2031.
The three-month London Metal Exchange (LME) copper contract is currently ruling at around $1,4575 a tonne. The metal has gained over 15 per cent year-to-date (YTD) and more than 5 per cent in the past month.
BMI said copper has largely shrugged off macroeconomic headwinds and has averaged $13,471 year-to-date (as of October 7).
Tariff uncertainty
“Throughout Q3 2026, copper has been marching higher amid tariff-driven uncertainty and mounting supply-side concerns, with the rally culminating in an intra-day record high of $14,875 on September 10 2026…,” it said.
Thereafter, it underwent a sharp, albeit short-lived, correction after reports said the White House had yet to decide on refined copper tariffs.
JP Morgan said geopolitical conflict in West Asia and the closure of the Strait of Hormuz drove up copper prices earlier this year. “West Asia is a major supplier of sulfur and sulfuric acid, which are used for copper leaching. That pressure helped push copper to an all-time high in mid-year, said Gregory Shearer, head of Base and Precious Metals Strategy.
Demand to stay strong
Shearer said the medium-term environment for copper remains supportive, even at such elevated prices. “Continued tight mine supply, ongoing weak production and structurally supported demand trends around electrification tied to data centre capex have not changed, even with the threat of Fed hikes later this year,” he said.
AOCE said global copper demand is expected to remain strong through to 2031, driven by demand for clean energy technologies, data centres and broader electricity infrastructure. “Supply is expected to grow gradually due to mine disruptions, trade and supply chain challenges, and delays to new mines,” it said.
JP Morgan’s Shearer said that a material component of the rally in copper over the last six months is an embedded tariff uncertainty, which has created a tug of war between the US and China for copper units.
China net short
“Globally, the refined copper market is pretty well supplied. But China, which is net-short and still needs to import copper, is being challenged by the flow of copper going into the United States, which has raised China’s buying floor,” he said.
BMI said copper prices have been elevated due to resilient Chinese demand signals and enduring concerns surrounding Chilean supply.
“For the remainder of the year, prices are set to oscillate sharply in response to tariff-policy headlines, with the eventual US decision likely to dictate near-term price direction,” said the research agency.
AOCE said the ongoing conflict in West Asia and energy disruptions could raise diesel costs and disrupt sulphuric acid supply and pressure on copper output.
Robust floor
BMI said any challenge to the protectionist rhetoric or watering down of tariffs will test the metal’s upside by prompting a reassessment of the tariff premium.
“Nevertheless, broadly intact structural tightness should provide a robust floor to prices and cushion any possible downward momentum in the event the Washington decision triggers a correction,” it said.
Shearer said escalation in policy would create an incentive to import copper into the US before any tariffs come into force, which would be bullish for prices.
BMI said US tariff uncertainty remains the clearest near-term catalyst for copper, adding a significant layer of distortion to the market. The possibility of a tariff on refined copper has widened the Comex premium over the LME and created substantial incentives to redirect metal into the US.
Beyond fundamentals
The broader macroeconomic backdrop remains a constraint on copper’s upside, yet these headwinds are set to temper, rather than derail, the market’s supportive structural fundamentals,” it said.
“We continue to view the current rally as having extended beyond what fundamentals alone would suggest, while keeping a close eye on the US tariff outcome. Persistent macroeconomic risks could further cap the scope for a decisive breakout, particularly should the dollar appreciate and the Federal Reserve deliver a further 50 basis points of rate hikes this year,” said BMI.