Why Glencore Is a High-Conviction Buy as Copper Prices Surge and Supply Deficits Loom

The global copper market is undergoing a seismic shift, driven by a perfect storm of supply constraints, policy-driven uncertainty, and surging demand from the energy transition and AI infrastructure. As prices hit record highs in early 2026, investors are increasingly turning to producers with robust growth strategies and undervalued fundamentals. Glencore, a titan in the base metals sector, stands out as a prime candidate for cyclical valuation arbitrage and long-term supply-demand positioning.

A Market in Turmoil: Copper's Structural Imbalance

Copper prices have surged to unprecedented levels, with the LME benchmark hitting $13,387.50 per metric ton in January 2026-a 40% rally in 2025 alone. This surge is not a fleeting spike but a reflection of deepening structural imbalances. J.P. Morgan projects a 2026 refined copper deficit of ~330,000 metric tons, exacerbated by operational challenges at key mines like Chile's Quebrada Blanca and Peru's Antamina, as well as the partial closure of Indonesia's Grasberg mine. Meanwhile, U.S. policy uncertainties-such as potential tariffs on refined copper-have spurred stockpiling, with Comex inventories rising to over 450,000 metric tons.

The long-term outlook is equally compelling. Wood Mackenzie forecasts a 24% increase in copper demand by 2035, driven by electrification, renewable energy, and AI-driven infrastructure. With supply growth lagging demand, prices are poised to remain elevated, creating a tailwind for producers with disciplined capital allocation.

Glencore's $24B Expansion: A Strategic Masterstroke

Glencore is uniquely positioned to capitalize on this paradigm shift. The company has outlined a $24B investment plan to scale copper production to 1.6 million metric tons annually by 2035, a 68% increase from its 2024 output of ~950,000 tons. This expansion hinges on restarting mothballed assets like Argentina's Alumbrera mine, which is expected to contribute 75,000 tons annually once operational in 2028, and advancing brownfield projects at Collahuasi (Chile) and Antapaccay (Peru).

Despite short-term production cuts in 2026-revised guidance of 810,000–870,000 tons due to operational setbacks at Collahuasi-Glencore remains confident in a production recovery from 2027 onward. The company's focus on capital-efficient projects and partnerships further mitigates risk, aligning with its strategic goal of becoming one of the world's largest copper producers.

Cyclical Valuation Arbitrage: A Mispriced Opportunity

Glencore's valuation presents a compelling case for cyclical arbitrage. The stock trades at a price-to-sales (P/S) ratio of 0.26x, far below the Metals and Mining industry average of 2.76x and the peer group average of 3.45x. This discount reflects market skepticism about short-term production challenges and cyclical volatility. However, Simply Wall St's Fair Ratio framework suggests a reasonable P/S of 1.01x, implying a ~300% upside if the market re-rates the stock to reflect its growth potential.

While DCF models indicate fair valuation, the current discount offers a margin of safety. With copper prices averaging ~$12,075/mt in 2026 and SP Angel noting that higher prices are needed to incentivize new supply, Glencore's low-cost production profile and expanding output position it to outperform peers.

The Investment Thesis: A 15% Rally in 2026?

Analysts project a 15% rally in copper prices in 2026, driven by tightening supplies and accelerating demand. For Glencore, this creates a dual tailwind: higher prices and growing volumes. The company's $24B expansion is expected to deliver a 9.4% annualized copper production growth from 2026 to 2029, outpacing the industry's 4% compound growth rate.

The undervalued P/S ratio, combined with a clear path to 1.6 million tonnes of production by 2035, makes Glencore a high-conviction buy. As the market grapples with supply deficits and energy transition demands, the company's disciplined capital allocation and strategic positioning in base metals offer a rare combination of cyclical and structural growth.

Conclusion

Glencore's $24B copper expansion, undervalued fundamentals, and alignment with long-term supply-demand dynamics make it a standout in a sector on the cusp of a new era. With copper prices surging and supply deficits looming, the company is poised to deliver outsized returns for investors willing to capitalize on this mispriced opportunity.