2026 Materials Market Talk: What Traders Are Saying About Copper's Scarcity vs. Energy's Abundance

The 2026 materials market is split by a classic divergence. On one side, a scarcity narrative is driving copper to record highs. On the other, a surplus narrative is keeping energy prices in a period of relative abundance. This is the central talking point, with traders actively pricing in these opposing forces.

Copper prices have surged to record highs, rallying by more than 20% since the start of 2025. The market imbalance is expected to persist, with a global refined copper deficit of ~330 kmt projected for 2026. This tightness stems from acute supply disruptions, including a fatal mudslide at Grasberg in Indonesia and downgraded guidance from Chile's Quebrada Blanca mine. J.P. Morgan sees prices reaching $12,500/mt in the second quarter, ultimately averaging around $12,075/mt for the year.

By contrast, energy commodities like oil are in a period of relative abundance and moderate pricing. Oil prices declined through 2025 due to a growing supply glut, and analysts expect them to remain soft in 2026. This creates a clear split: while copper faces a structural deficit, oil and gas markets have ample supply.

This divergence is reshaping the conversation. Analysts note the market's focus has shifted from pure price signals to political variables. In a telling sign, 64 percent of industry respondents believe that political variables-mitigating geopolitical risks, securing policy support, or access to critical minerals-are the main priority for 2026. The copper rally is being driven by supply shocks and AI demand, while energy's stability is a function of oversupply and a transition that is reducing long-term oil demand growth. The market is now pricing in both scarcity and surplus, with policy access becoming the critical variable for navigating the gap.

Company-Specific Signals: Rio Tinto, Nucor, and Air Products

The broad market themes of copper scarcity and energy abundance are now translating into concrete strategic moves and pressures for key industry players. Their positioning reveals how the new reality is reshaping business models and financial outcomes.

Rio Tinto, a major metals miner, is at the epicenter of the copper supply chain's acute disruptions. The company's operations are directly impacted by force majeure conditions, such as the fatal mudslide at its Grasberg mine in Indonesia. This closure, which accounts for a significant portion of previously forecasted production, is expected to remain shut until the second quarter of 2026. This is not an isolated event but a symptom of a broader tightening. As J.P. Morgan notes, mine supply growth estimates for 2026 have fallen to only around +1.4%, creating a structural deficit. For Rio, this means navigating a volatile environment where its own production is constrained, even as global prices rally on the resulting scarcity.

Nucor, a major U.S. steel producer, is directly exposed to the price volatility of both copper and aluminum, which are critical inputs for its products. The company operates in a sector where material availability has become the primary governor of growth. The surge in copper prices, driven by AI infrastructure planning that requires four times more copper than traditional data centers, creates a direct cost pressure. At the same time, the strategic shift toward aluminum as a substitute is a direct response to that same price spike. Nucor's financials and production planning are now caught between these competing metal dynamics and the uncertainties of trade policy, which can further disrupt supply chains and input costs.

Air Products & Chemicals, positioned at the intersection of energy transition and industrial demand, benefits from the contrasting energy market conditions. The company's industrial gas business sees its input costs eased by lower fossil fuel prices. This relative abundance in energy markets provides a cost advantage that can help buffer the company against broader inflationary pressures. It also positions Air Products to support the energy transition, where its gases are used in hydrogen production and other clean technologies. In this setup, the company is leveraging the energy sector's current stability to strengthen its industrial portfolio.

Together, these three companies illustrate the divergent pressures at play. Rio Tinto is grappling with supply shocks that are driving prices higher. Nucor is navigating a materials squeeze where availability and cost are in conflict. Air Products is using energy's current abundance to fortify its industrial operations. Their strategic pivots in 2026 will be defined by how they manage these specific, market-driven constraints.

What's Next: Catalysts and Risks in the 2026 Trade

The market's current narratives-copper scarcity and energy abundance-will be tested by a set of specific events and data points in the coming months. For traders, the path forward hinges on validating these stories or uncovering the cracks beneath them.

For copper, the primary catalyst is the resolution of acute supply disruptions. The mudslide at Grasberg and other mine issues are the immediate shocks driving the rally. As these operations gradually resume, particularly in the second quarter, the market will scrutinize whether supply growth can begin to close the projected global refined copper deficit of roughly 150,000 metric tons. Any delay or further disruption would reinforce the scarcity thesis. The key risk, however, is a mismatch in timing. The surge in prices is being fueled by aggressive AI infrastructure planning that requires four times more copper than traditional data centers. If the rollout of this demand slows due to economic headwinds or policy uncertainty, the tight supply could lead to a painful inventory build, breaking the rally. The market is now pricing in a structural deficit, but it is also pricing in a future of soaring demand.

Energy markets face a different set of watchpoints. The current trend of moderate pricing and relative abundance is vulnerable to two forces. First, the pace of the energy transition itself. Record EV sales are reducing long-term oil demand growth, but the investment in new energy sources requires significant capital. A slowdown in that spending could disrupt the new equilibrium. Second, geopolitical stability is critical. The energy market's recent calm has been partly a function of geopolitical de-escalation. Any major conflict, particularly in key producing regions, could quickly tighten supply and break the moderate pricing trend. The risk here is a shift from abundance to volatility.

Looking further out, a systemic shortfall frames copper as a potential bottleneck for global growth, a risk level not present in prior cycles. S&P Global projects a shortfall of 10 million tons by 2040, calling it a "systemic risk for global industries, technological advancement and economic growth." This long-term view suggests that the 2026 deficit is not a temporary blip but the start of a multi-decade squeeze. The implications are profound: material availability could become the primary governor of growth for entire sectors, from power generation to construction. This transforms copper from a cyclical commodity into a strategic constraint, where policy access and supply chain resilience are as critical as price signals. The market is now trading on a story that extends far beyond the next earnings report.