Copper Rises on 2026 Supply Concerns Amid Tariff Uncertainty

Copper prices rebounded on Monday after a sharp selloff the previous day, as investors shifted focus back to the long-term supply-demand fundamentals of the metal. The industrial commodity climbed as much as 1.5% on the London Metal Exchange, clawing back some of the 3% losses suffered on Friday. The reversal came as markets refocused on expectations for a tighter copper market in 2026, driven by structural demand from renewable energy and AI-related infrastructure.

The recent volatility highlighted the metal's sensitivity to tech sector trends.

On Friday, copper had hit a record high near $12,000 per ton before reversing course as concerns over an AI-driven tech bubble triggered a broad selloff. Zinc and aluminum also saw gains on Monday, with zinc up 1.1% and aluminum rising 0.4%. These moves suggest a partial recovery of confidence in the broader industrial complex.

Goldman Sachs Research has issued a more cautious outlook, forecasting that copper prices will trade between $10,000 and $11,000 in 2026 despite strong demand from grid and power infrastructure projects. The firm notes that while structural demand is growing, the global copper market is expected to remain in a small surplus through 2026. However, potential U.S. import tariffs and mine supply constraints could provide a floor to the price action. Goldman projects the LME price to average $10,710 in the first half of 2026.

Why the Market Is Watching U.S. Tariff Moves

The possibility of U.S. tariffs on refined copper imports is a key near-term factor that could influence price dynamics. The U.S. commerce secretary is expected to recommend a tariff of at least 25% by mid-2026, with importers likely building stockpiles in anticipation. This scenario could create a short-term spike in demand as buyers rush to secure supplies ahead of the policy change. Goldman Sachs suggests that while prices might dip slightly after the tariffs are implemented, they are expected to recover and trend higher afterward.

Risks to the Copper Outlook

Despite the bullish demand story, challenges remain on the supply side. Australia's Fortescue is expanding its copper exposure by acquiring the remaining 64% stake in Alta Copper for $101 million, signaling confidence in the sector. However, Indian copper producers have raised concerns about cheap imports under free trade agreements, which they claim are undercutting domestic manufacturing according to reports. The Indian Primary Copper Producers Association has called for a 3% safeguard duty and tighter import quotas to protect local smelters and refineries from foreign competition.

Additionally, global smelting margins have weakened significantly, with treatment and refining charges (TC/RC) projected to fall to near zero in 2026. This trend could pressure domestic producers in countries like India and China, where margins are already under strain from low-cost imports and weak TC/RC. These structural issues could limit how high prices rise in the short term, even as demand fundamentals remain robust.

What This Means for Investors

The mixed signals for copper have created a complex environment for investors. ANZ analysts remain bullish, expecting the market to move into a deficit in 2026 driven by mine disruptions and strong green energy demand. However, Goldman Sachs cautions that the market remains in a surplus and will take longer to tip into a shortage. Investors are advised to watch the U.S. tariff decision, supply chain bottlenecks, and shifts in China's economic policy for potential catalysts.

For now, the market is in a balancing act. Copper's performance is increasingly tied to AI and tech valuations, but structural demand from power infrastructure and renewables offers long-term support. As one of the key metals in the energy transition, copper continues to serve as a barometer for global industrial activity and technological advancement.