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Informist, Wednesday, Jun. 24, 2026

 

By Abhijit Doshi

 

MUMBAI – Recent developments on the global stage have left the short-term outlook for copper uncertain and the market volatile. Fast-changing fundamentals and data flows have been leading the market in opposite directions in the last few weeks.

 

The US-Iran peace agreement boosted the metal for a while but proved far from convincing, and gave way for the US Federal Reserve's hawkish stand on interest rates to take priority for traders. The US Fed's stand has clouded the outlook for economic growth, making demand scenario for the metal look bearish, analysts said.

 

At its latest policy meeting on Jun. 16-17, Fed officials left interest rates unchanged but signalled increasing support for future rate hikes, even as the new Fed Chair Kevin Warsh reaffirmed his commitment to fight inflation. As a result, dollar gained strength over other major currencies. A stronger dollar makes dollar-denominated commodities such as copper more expensive for other currency holders, while the prospect of higher borrowing costs weighs on industrial metals demand and global growth.

 

"...prices (of copper) may slip on concerns that tighter monetary policy in major economies may push borrowing cost higher clouding outlook for global economic growth and industrial metal demands," ICICI Direct said. Nine of the Fed's 19 policymakers believe they will need to raise the policy rate this year. According to CME FedWatch, 51% of traders expect the US Fed to hike rates by 25 basis points to 3.75-4.00% in its September meeting.

 

Several major financial institutions have recently revised their copper price outlooks to incorporate tighter monetary policy amid persistent inflationary pressures, said Kedia Advisory in a note Wednesday.

 

However, the declining exchange inventories of copper indicate strong demand. "Shanghai Futures Exchange copper stocks fell 23.6% week-on-week to 143,875 tonnes, the lowest level since December, while LME inventories declined to 352,150 tonnes, their lowest level in nearly three months," analysts at Kedia Advisory said. Cancelled warrants have reached 37% of total stocks, indicating strong withdrawal demand.

 

Demand for the metal has been rising from renewables, energy storage and electronics sectors. Data centres, a growing consumer of copper, are also in better financial conditions for further investment, analysts said.

 

Global copper concentrate shipments have increased since April, suggesting some improvement in mine supply, Dow Jones said, quoting Xinda Futures analysts. But China's concentrate imports remain weak and treatment charges stay near record lows, they added. Excess smelting capacity has so far prevented significant production cuts. Weakness in traditional Chinese copper-consuming sectors also has continued.

 

Market gains were partly capped by improving supply prospects, said Kedia analysts. Rio Tinto has resumed exports of copper concentrate from its mine in Mongolia, while expectations of increased sulphuric acid availability could support refining activity. However, concerns regarding long-term mine supply continue to influence the price outlook. Jefferies forecasts an average annual copper supply deficit of 491,000 tonnes through 2030, while Goldman Sachs and Citigroup have both raised their copper price forecasts due to tighter mine supply and stronger import demand. Goldman Sachs expects deficits outside the US to remain significant through 2027 and raised its end-2026 price forecast to $13,735 per tonne. Citi is more bullish and sees prices climbing to $14,500 in the near term.

 

 

Uncertainty about the US tariff also persists. A review and recommendation to US President Donald Trump by US Commerce Secretary Howard Lutnick on the tariff is due by the end of the month. The US has floated a possible 15% levy on copper imports from the start of 2027, followed by 30% from 2028. According to some analysts, global inventories are declining because of strong demand from the US, a factor that could reverse under the new tariff regime.

 

The copper market could also feel the impact of El Nino. In the past, the phenomenon has brought excessive rainfall to South America, significantly disrupting copper mine production at times, said Commerzbank Research. Chile and Peru, where mines had to be closed due to flooding, account for around 35% of global copper ore output. "In the current phase, in which the raw materials market is already tight, this could markedly fuel supply concerns and thus drive the copper price sharply higher," it said in a note.

 

At 1550 IST, the three-month contract of copper on the LME was down 0.3% at $13,304.5 per tonne. The July futures contract on MCX was trading at INR 1,284.2 per kg, down 1.2% from its previous close.  End

 

US$1 = INR 94.66

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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