According to TD Securities analysts, the recent strength in copper prices is primarily attributed to speculative positioning, tariff-related arbitrage, and headlines about supply disruptions, rather than a genuine global shortage of the metal [1]. The analysts note that money managers are continuing to increase their exposure to copper, which has contributed to the current elevated price levels [1].
One of the key factors supporting copper prices has been the lack of clarity around Section 232 tariffs, which has enabled a supportive arbitrage that draws copper into the U.S. market. This has resulted in a reshuffling of inventories across regions, rather than indicating an outright global shortage [1]. Additionally, supply disruption headlines, such as the Democratic Republic of Congo's (DRC) immediate ban on concentrate exports, have further fueled price increases and offset signs of weakening industrial demand [1].
Looking forward, TD Securities expects that softer demand, normalization of tariff-driven trade flows, and the return of mine capacity will erode the current tightness in the copper market. The analysts project that these factors will lead to a surplus emerging through 2027, which should pull copper prices down from the $14,000+/t levels currently reflected in the market [1].
Overall, the report suggests that the current price strength is not sustainable and that improving market fundamentals are likely to result in lower copper prices in the coming years [1].
CONCLUSION
TD Securities anticipates that copper prices will decline as speculative and tariff-driven distortions unwind and market fundamentals improve. The current elevated prices are seen as unsustainable, with surpluses expected to emerge through 2027, leading to a normalization of copper valuations.