Copper prices are poised for continued volatility in the coming months as geopolitical tensions in West Asia, particularly the US-Iran conflict, compound existing macro headwinds and tariff uncertainty, analysts said. The red metal recently surged to a 6-week high, with the London Metal Exchange (LME) three-month contract quoted around $13,800 a tonne, according to market reports. Prices have gained 5% over the past month and over 13% year-to-date, reflecting a tight supply-demand balance.
Fundamental Drivers
According to research agency BMI, a unit of Fitch Solutions, “As we head into H2 2026, we expect copper prices to remain caught between macro headwinds and tariff uncertainty, while geopolitical risks persist, rendering the market acutely exposed to further volatility and highly sensitive to developments in the Middle East (West Asia).” ING Think, the economic arm of ING, noted that “Tight inventories, strong import demand and falling exchange stocks suggest copper fundamentals remain supportive in the near term. Still, concerns over global growth and the Fed outlook could limit further gains.”
Supply-Side Intelligence
Supply disruptions remain a key price driver. Australia’s Office of Chief Economist (AOCE) stated that “Elevated (copper) prices are expected to persist through 2026 due to ongoing supply disruptions, tight concentrate markets, and strong demand.” On the LME, copper surged 38% year-on-year in the first quarter, reaching a record high of $14,500 a tonne in January, before easing. According to AOCE, prices remain elevated, “supported by mine disruptions and risks of sulphuric acid shortages due to the Middle East conflict. About 20% of world refined copper produced uses the acid in solvent extraction and electrowinning (SX-EW) operations.”
In China, the Yangshan premium – a key import gauge – surged to $100/tonne, its highest level in over a year, up from just $20/tonne in late January. ING Think attributed this to scrap shortages boosting demand for refined metal imports. The tightness follows Beijing’s crackdown on invoice trading, which disrupted scrap flows and constrained domestic supply, along with maintenance outages at several Chinese smelters.
Demand-Side Intelligence
China’s copper inventories are now near the bottom of their seasonal range, while LME stocks sit at their lowest since March as metal is drawn into the Chinese market, according to ING Think. This could keep prices elevated. However, China’s resistance to higher prices and inflation concerns have capped gains. AOCE projected that global copper demand is expected to slow in 2026 amid geopolitical uncertainty and softer economic conditions. On the supply side, only gradual growth is anticipated due to delays in new mine development.
Price Outlook
| Source | Forecast (USD/tonne) | Key Context |
|---|---|---|
| BMI | $12,700 (raised) | Sustained support from supply pressures, tariff tightness, AI optimism |
| AOCE (near-term) | Elevated through 2026 | Mine disruptions, acid shortage risks |
| AOCE (medium-term) | ~$11,050 by 2031 (real terms) | As mine supply lifts and output matches demand |
BMI cautioned that the current rally already extends beyond what fundamentals alone would justify, and a more constructive geopolitical and macro backdrop is needed to rule out downside risks. The US tariff decision remains the most immediate directional catalyst, according to BMI. ING Think added that copper continues to find support from expectations of potential US tariffs.
For commodity traders and procurement teams, the key data releases to watch include LME warehouse stock levels, Chinese import premium trends, and any new US tariff announcements. With the US-Iran conflict still unfolding and supply-side disruptions persisting, copper is likely to remain a high-volatility play in the second half of 2026.
Sources:
