MarketsJul 18, 2026
Why Copper Prices Are Disconnected From Fundamentals Right Now
Market Valuation
Rhea Lobo
Discover
Copper is having a moment, but Wall Street is starting to question the price. The metal is up more than 15% over the past year and recently set an all-time high above $6.60 a pound. However, several major research firms now believe the rally has outrun the data.
For decades, copper demand was tightly linked to Chinese real estate construction but that connection has weakened. Goldman Sachs co-head of global commodities research Samantha Dart says the drivers have shifted toward electric grids, EVs, data centers, and defense spending (all structural trends rather than cyclical ones).
The AI buildout is the newest and most discussed pillar. Data centers require 20 to 40 tonnes of copper per megawatt of applied power.
Battery electric vehicles use roughly 53.2 kg of copper each, more than double the 22.3 kg in a conventional car. Offshore wind installations use 8K kg per megawatt versus 1.15K kg for coal-fired plants.
Copper has even started moving in tandem with AI hyperscaler stocks. Copper futures climbed 12.5% since the start of 2026, while Nvidia rose 12.4% and Broadcom advanced 13.2% over the same period.
The supply side constraints are adding pressure. BMI cut its global mine production growth forecast for 2026 to 2.4% from 2.8%, driven mainly by Chile and ongoing output issues at key mines.
US tariffs have kept CME copper stocks at record highs, up 34.9% since the start of the year. Sulphuric acid shortages, critical for copper processing, have emerged as a fresh vulnerability following disruptions through the Strait of Hormuz.
Despite the bullish long-term story, most analysts think current prices reflect sentiment more than supply and demand. Goldman Sachs is forecasting a 490K-tonne surplus for 2026. BMI also notes the market remains in surplus this year, though that surplus has narrowed to roughly 93K tonnes from 212K tonnes projected for 2025.
"I think what makes me nervous about the continuation of the copper-price rally is that it has been really very much investment-driven, rather than fundamental-driven."
Roukaya Ibrahim, BCA Capital
Ibrahim says a 10% to 15% pullback would recalibrate prices to fundamentals and create a genuine buying opportunity. Copper was trading near $6.41 a pound as of mid-July, down from its June peak.
From 2027, the picture changes. BMI projects the market swings into a 66K-tonne deficit, with shortfalls widening every year after. The firm sees copper averaging $15K per tonne in 2029 and reaching $17K by 2035, the most bullish long-term call among major forecasters.
With Q2 earnings season approaching, UBS has laid out its top picks across the sector. Freeport-McMoRan ranks first, with focus on the Grasberg mine recovery and potential upside to 2026 and 2027 guidance.
Teck Resources is expected to deliver a third consecutive strong quarter. Hudbay Minerals is UBS's top mid-cap pick after a recent pullback.
Southern Copper is getting fresh attention from a different angle. Firmer metals prices combined with improved political stability in Peru and Mexico are lifting its outlook. The stock is up 93.6% over the past year, though it trades roughly 60% above one analyst's estimated fair value.
The long-term copper thesis is credible and well-supported. The near-term entry point, most analysts agree, is not.
