BMI – a Fitch Solutions company – has maintained its 2026 average yearly copper price forecast at $11 000/t, as tightening supply and positive sentiment towards demand from sectors linked to the transition to net zero are expected to sustain the bullish outlook for the red metal, cushioning sluggish Mainland Chinese demand stemming from its beleaguered property sector.
In its price outlook for copper, BMI explains that, while tariff-related developments dominated the narrative up to July and August 2025, prolonged supply shocks emerged as the primary catalyst behind copper price uplift from September 2025 onwards.
The company explains that December’s US Federal Reserve (Fed) rate cut, persistent concerns over supply-side tightness and the prospect of further sectoral tariffs continue to fuel year-end optimism for the metal, shrugging off Chinese demand weakness.
Copper prices have averaged $9 934/t for the period from January 1, 2025, to December 23, 2025, extending their record-breaking rally and reaching a fresh all-time high above $12 000/t on December 23.
On the macro front, BMI says the US dollar index remains stuck at between 95 and 100, with BMI’s Country Risk team anticipating less volatility for the US dollar this year.
“While the dollar index is expected to trade within a broad range of around 95 to 100 over the coming quarters, a move to slightly stronger levels is not ruled out, particularly if the US economy outperforms, which, in turn, will cap the upside potential for copper prices.
“Easing monetary policy is likely to provide a tailwind, with the US Fed forecast to continue easing in 2026, reducing the federal funds rate by 50 basis points over the year,” it says.
However, BMI says this might prove as a less supportive factor later this year as the easing cycle that began in mid-2024 loses momentum, with supply-side constraints and tariff pressures persisting as the predominant forces.
“Indeed, we do not rule out bouts of volatility amid looming, renewed US tariff pressures, with copper on the cards for further tariffs, as the US Secretary of Commerce is required to provide an update on the domestic copper market by June 30 to determine whether to implement a universal duty on refined copper of 15% from 2027 and 30% from 2028”.
As the dislocation persists, with pre-tariff stockpiling yet to fully run its course, BMI says it sees the copper market, excluding the US, operating with thinner buffers, underscoring market fragility.
“We note that the copper market is poised to remain highly sensitive to any supply-side disruptions into 2026, skewing the balance of risks to our outlook to the upside”.
“We also note that regional availability distortions are becoming more acute as we head into 2026, with copper stocks continuing to flow into the US and Comex inventories surging to an all-time high, having almost quintupled since the start of the year, hovering around 457 000 t, as of December 17, 2025, driven by pre-tariff stockbuilding and Comex-London Metal Exchange (LME) arbitrage opportunities”.
BMI notes that LME copper stocks on warrant have contracted sharply at the same time, falling by 59.2% in the year to December 18, 2025.
“If tariff threats materialise later in 2026, the Comex premium over the LME is likely to widen further, mirroring distortions seen in 2025, while in case US President Donald Trump decides to walk away from tariffs yet again, significant volumes of US copper are likely to flow back, sending US prices into free fall, wiping out earlier gains”.
SUPPLY AND DEMAND
On the demand side, BMI notes that the largest consumer of copper, Mainland China, continues to struggle with its real estate sector, although robust non-property demand drivers remain supportive.
BMI says its Country Risk team’s forecasts point to an overall slowdown in Chinese growth in 2026, with real GDP growth decelerating from 5% in 2025 to 4.5% this year, and risks to forecast tilted to the downside.
Additionally, the company says purchasing managers’ index (PMI) figures for the month of November point to yet more weakness in the economy, noting that the official manufacturing PMI remained contractionary at 49.2, for the eighth consecutive month, though a touch better than its reading of 49 in October.
Meanwhile, the official non-manufacturing PMI slipped to its lowest level since December 2022 at 49.5.
The lingering domestic property market downturn, which shows few signs of abating, is adding to copper demand headwinds, says BMI.
The company notes that, from January to November 2025, investment in the real estate sector declined by 15.9% year-on-year, after falling by 14.7% year-on-year over the first ten months.
However, BMI says it expects China’s electric vehicle (EV) and renewable energy sectors to still anchor copper demand, attempting to mitigate the loss from its property sector.
Meanwhile, global economy stabilisation, alongside easing trade frictions, is likely to fuel broader support for copper demand in general.
BMI says tariff uncertainty peaked in August 2025, and while flare-ups between the US and individual economies are possible over the coming quarters, BMI’s Country Risk team expects overall tariff uncertainty to continue declining throughout this year.
On the supply side, BMI says it expects the copper market to tip into deficit this year, sustaining the bullish narrative for the red metal throughout the year.
The company explains that the reversal from the modest surplus projected for 2025, is forecast to be driven by a deceleration in refined output growth, with production anticipated to increase by just 1.1% year-on-year, down from a 2.7% year-on-year rise in 2025, as a wave of disruptions to mine supply throughout 2025 is set to further exacerbate tightness in concentrate availability.
As for mine production, BMI says it now forecasts global copper mine output to increase by 3.3% year-on-year in 2026, underpinned by the gradual recovery of major sites affected by disruptions in 2025, particularly the Grasberg mine, in Indonesia; El Teniente, in Chile; and Kamoa-Kakula, in the Democratic Republic of the Congo (DRC).
Despite an anticipated recovery in mine output this year, BMI notes that its outlook remains heavily contingent on sustained operations and the timely restart of projects, while the possibility of further operational disruptions and delays in ramp-ups tilts the balance of risks to the downside.
BMI says copper mine output growth for 2025 has been revised further downwards to 1.3% year-on-year, as operational incidents and production downgrades across major producing mines offset gains from new projects, resulting in tighter concentrate supply and greater market uncertainty.
“Indeed, we highlight that downside risks persist, as copper guidance across major miners for 2026 remains muted.”
LONG-TERM OUTLOOK
In the longer term, BMI says it expects the copper market to remain in deficit as the green transition accelerates, along with demand for “green” metals, including copper.
BMI notes that it forecasts prices to reach $17 000/t in 2034 as the long-term structural deficit persists, owing to a very strong long-term demand outlook.
The company says it also expects a significant pipeline of new projects to bring additional copper to the market in the coming decade noting, however, that supply growth will be increasingly outpaced by demand.
BMI explains that copper is required in almost every aspect of the green energy transition.
According to the International Energy Agency (IEA), battery electric vehicles require about 53.2 kg of copper, more than the 22.3 kg needed in the production of conventional cars, it notes.
Offshore wind, onshore wind and solar power sources require 8 000 kg/MW, 2 900 kg/MW and 2 822.1 kg/MW of copper, respectively, significantly more than the 1 150 kg/MW required in coal-fired power plants.
“This will push the market into greater deficit and drive prices higher towards the end of the decade. We also expect to see some growth in the global construction industry, a driver of copper demand unrelated to the green energy transition,” says BMI.
RISKS TO OUTLOOK
Meanwhile, BMI says it sees a number of upside and downside risks to its forecast for copper prices, given the current volatile economic conditions.
On the downside, copper prices could head lower if China’s economic momentum weakens further in 2026, as a sustained rally hinges on strong demand expectations, particularly from China, the world’s largest consumer of industrial metals, including copper.
BMI notes that the potential reversal of tariff threats later this year and exemptions of refined copper from tariffs, would improve the availability of the metal elsewhere, alleviating some of the supply pressures within markets outside of the US.
In terms of upside, unforeseen supply disruptions, protracted recovery from operational setbacks at sites affected in 2025, as well as lower Chinese refined copper production, have the potential to exert upward pressure on prices.
“A strong recovery in China’s property sector would also be one of the major influencers driving demand and supporting prices.”