StoneX Copper Market Outlook 2026 - Written Outlook

Copper Market Outlook 2026: Navigating a Changing Trade Landscape

WHERE WE ARE WITH COPPER PRICES AND WHY?

At the time of writing, copper is battling with tin to be the best performing base metal this year (+23%YTD). At first glance at the chart below, and taking into consideration tin’s usual price movements as being volatile given its small market size, this initially suggests that copper may be overvalued at its current level.

 

 

WITH THAT IN MIND, LET’S LOOK AT WHAT’S TAKEN US HERE? 

 

 

TAKING A STEP BACK AND LOOKING AT COPPER ON A EIGHT-YEAR CHART 

Over the last three years, copper has formed a ‘new normal’ trading range of higher highs and higher lows. However, there have been several times in which copper has tried to break out to the upside, only to come back down into this range.

1. Start of 2023: China reopened from a year-long COVID-19 lockdown

2. H1 2024: during a copper squeeze on COMEX

3. September 2024:  China announces its largest stimulus package since the GFC

4. March 2025: Following the aftermath of President Trump signing an Executive Order Investigation into US copper imports Under Section 232 of the Trade Act of 1962

At present, copper is once again trading above its three-year channel, driven by a ‘perfect storm’, with fundamental supply disruptions, a warming in the macro-economic outlook and investors favoring copper. 

But the question everyone is asking = can this last?

In this presentation and written report, we will address the realities ahead for copper and how prices will be impacted by the outlook in the macroeconomic landscape, the fundamentals, tariffs and investors.

 

Source: Bloomberg, StoneX

 

UNDERSTANDING MACROECONOMIC  DRIVERS IS CENTRAL IN FORECASTING FUTURE PRICE PERFORMANCE

There are five key area’s that we follow: 

1. The pace and path of monetary policy

We see synchronized, advanced economy monetary easing as supportive for a recovery in the global industrial cycle, with falling yields as holding a net positive impact on copper. Here, while the path of monetary policy in the west has become more uncertain given the impact of tariffs, with its impact to inflation still being digested and the path of tariffs itself still highly uncertain. In our view, despite the pressure being placed on Federal Reserve Chairman Jerome Powell from President Trump to cut rates. We expect that the Federal Reserve will remain data dependent and continue to hold their dual mandate goal of balancing maximum employment and price stability in the country. We forecast ~100bps of rate cuts over the course of 2026. 

 

 

 

2. The Impact of the US Dollar

The US dollar historically holds an inverse relationship with copper, however, at present this relationship has turned positive, with copper prices instead taking its queues from fundamental and investor driven impacts. With this said, we see this as temporary, with dollar weakness over the year ahead on the back of a dovish Federal Reserve and waning foreign appetite for US assets supporting copper prices. Please note, we do not rule out a bouts of dollar strength, if global risk appetites shift or geopolitical tensions rise, with US dollar remaing the world’s key reserve and investment currency, lacking credible long-term alternatives.

3. The Health of China 

In our view, despite announced (and future expected) stimulus in the country over the next year, that will fall in line with China’s 15^th Five Year Plan (starting in 2026), supporting investment into copper intensive areas such as advance industrial modernization and digital transformation. We forecast that the economy will face ongoing challenges in reaching its targets, especially given there were no announcements in the outline of the five-year plan that includes any ‘bazooka style' stimulus, instead signaling a phase of consolidation and stability rather than aggressive expansion.

While China appears on track to achieve its goal of ~5% growth in 2025, risks ahead are mounting from:

• deflationary concerns
• weakening investment demand
• record low confidence and consumer appetites
• deepening declines in the property market

In addition, anti-involution and tariff directives directly threaten the country's strongest growth areas of  industrial production and exports.

 

4. The Health of Global Manufacturing

We expect that global manufacturing should modestly improve from current levels, supported by: 

• lower western interest rates
• stimulus efforts in China
• a general move towards an easing in trade tensions

5. Weighing the risk of an escalation in ongoing or unknown geopolitical tensions

Geopolitical tensions can impact a commodity market in two ways:

• A risk channel: in which financial markets overestimate the impact on supply resulting in higher prices.

or

• An economic activity channel: Where a shock to economic growth creates uncertainty in investment and demand, leading to lower prices.

We see the addition of tariffs as playing a net negative for base metal demand in the longer-term. 

COPPER’S FUNDAMENTALS IN THE YEAR AHEAD

 

 

 

 

 

 

 

 

 

 

 

 

 

TARIFFS

 

 

 

 

 

 

 

 THE IMPACT OF INVESTORS AND SPECULATORS ON COPPER

The first thing to point out is, that the role of speculators and its impact on copper prices shouldn’t be overlooked given its ability to move pries away from either macroeconomic and/or fundamentals views.

The Classic example we have is H1 2024, in which investor interested soared into copper on the LME and COMEX exchanges, resulting in a squeeze on COMEX and a record nominal high on copper (for that time). The key takeaway here, is that during this period, we had record high copper prices, but historically wide contangos in the LME cash-3M spread. We have never seen prices this high, in a contango market, demonstrating the removal of copper price action from traditional price drivers. 

 

 

 

 

No surprise to see that copper remains one of the favorites of the suite underpinned by its long-term structural deficit outlook. And due to its use in electrification, copper is now seen as seen as a strategic alternative asset (not just a cyclical industrial commodity)

The global picture for copper is highly uneven, once again in our view reducing the argument for outright bullish themes for copper.

Copper Price Outlook

To year-end, copper prices are likely to remain elevated, underpinned by bullish themes:

Macroeconomics: warming momentum

• - China-US tensions have modestly eased
• - US Federal Reserve rate cuts
• - Expected announcements from China on its 15^th five year plan
• - End of US Government shutdown

Fundamentals 

• Market continues to digest supply disruptions and record low RCTCs

Tariffs

• Copper units are being drawn into the US on arbitrage opportunities 

Investors and Speculators

• Riding on the themes above

However, we do not see a clear break higher being able to be maintained

With this in mind, our argument is – what would be the next big push for copper prices to hold above or maintain new highs in 2026?

Macroeconomics:

The majority of the warming in the outlook has already been priced in, meanwhile, risks to global growth are plentiful: 

• Trade tensions could escalate again (especially between China and the US)
• Ongoing conflicts (Russian-Ukraine war, Middle East)
• Unlikely we will get bazooka stimulus in China in 2026
• Building concerns about global debt (Cu:Au ratio at lowest level on record)

Fundamentals:

• High copper prices negatively impact demand
• Chinese demand figures have been weak of late (disappointment over this year's and Golden September, Silver October)
• Outlook in major advanced economies remain tepid
• Copper market is relatively balanced

Investors:

• We may start to see long positions excited as a result of this and this is especially true if we see global visible inventory pick up (note, Q1 restocking period in China).