Why is everyone telling you to buy copper?

Copper is all the rage right now. Far fewer have dug into why the setup is so asymmetrically bullish. I trawled through what felt like the entire copper universe, so here's the data digest.

It all starts with demand vs. supply

You've probably seen the copper balance charts by now, which features small surpluses and deficits between now and 2030, then a deficit that widens through 2040 and beyond.

If this wire comes down to one thing, this is it. The near-term is a coinflip between surplus and deficit, but the long-term gap is something that can't be filled (more on this later). You need a certain number of tonnes to wire a house, build the grid, and cool a data centre. That number keeps rising, while what the world can dig up doesn't. That gap is effectively your investment case. 

As for the near-term, forecasts for 2026-27 vary substantially.

In July, Macquarie called a 262,000 tonne surplus in 2026 and surpluses above 700,000 tonnes a year across 2027-28. They got there by trimming 2026 global demand growth to 1.8% and generous supply assumptions, with Cobre Panamá restarting in the June quarter of 2027 and Grasberg back to full production by end-2027. The analysts also pointed to LME inventories at eight-year highs and Comex stocks at record levels, and argued the data centre copper story is smaller and slower than the market assumes.

ING, Morgan Stanley and Goldman Sachs are all in the deficit camp, forecasting deficits of 600,000 to 640,000 tonnes in 2026, the largest in more than two decades.

So between Macquarie at a 700,000 tonne surplus and the deficit pack at around 620,000 tonnes, that's a 1.3 million tonne gap on a market of roughly 28-29 million tonnes.

I guess the takeaway here is that nobody can accurately guess what's going to happen.

The disagreement isn't really about mine supply, since everyone concedes that's falling. It's about whether lost mine supply translates into less refined metal (what actually matters), how much scrap can fill the gap, and when the Cobre Panamá and Grasberg projects come back online.

The supply story

Copper is still Dr Copper, where the overwhelming majority of it is used for "traditional" industrial and non-AI related things, and its price remains sensitive to the ebb and flow of global industrial activity.

While demand and macro conditions vary, the industry is structurally short and has next to no chance of meeting what the world is trying to build.

If you flick through some of the recent quarterly/full year updates from major copper players, you quickly get the idea that being a copper miner is a tough gig and everyone is struggling for growth.

• BHP FY26 copper production landed at 1,953kt and FY27 guidance of 1,650-1,800kt implies a 8-16% step down on Escondida grade declines
• Freeport-McMoRan (23-Jul) Q2 copper production fell 18% to 357kt year-on-year
• Ivanhoe Mines (30-Jul) Q2 copper in concentrate fell 45% to 61kt from 112kt a year earlier, and the company tightened 2026 guidance to 290-310kt from 290-330kt
• Codelco chairman Bernardo Fontaine sees no path to the prior 1.7Mt target within four or five years, warning of another tough production year at the world's largest copper mine
• Lundin Mining cut Caserones 2026 guidance to 120-130kt from 130-140kt after a second Atacama winter storm knocked out power on 19 August
• Antofagasta cut 2026 guidance on 13 August to 625-655kt from 650-700kt after extreme rain and snow shut Los Pelambres, an event that prompted Chile to declare a state of catastrophe in Coquimbo
• Teck partially suspended Carmen de Andacollo on 17 July after heavy rainfall closed access roads, but has not quantified the loss and left guidance untouched

S&P Global published a research report on 3 September that lays out the structural undersupply better than anything else I've read.

In a nutshell:

There's also a concentration problem. Latin America holds 55% of all copper discovered since 1990. Add Asia-Pacific's 21% and the US and Canada's 10% and three regions account for 86% of 36 years of discovery.

Of S&P's 263 major discoveries, 165 have yet to enter production and 135 of those haven't even completed a feasibility study. They're stuck in permitting hell, in perpetual community consultation, in the middle of nowhere or simply uneconomical at current prices.

New supply is hard at every stage, from exploration to production. That's why so many players have opted for M&A instead (great for growth, not so great for new supply).

The risks

Copper is up almost 20% year-to-date, and a big chunk of that strength was from Trump's Section 232 probe in February 2025 and the prospect of tariffs on refined copper. Metal poured into Comex warehouses as manufacturers front-ran the decision, from around 80,000 tonnes to well over 600,000 tonnes by late August.

Reuters reported on 10 September that the White House still hadn't decided, with officials weighing higher manufacturing costs against affordability concerns. Copper fell 4.8% to US$6.53/lb, so some of that premium is unwinding.

As for those wide 2026-27 analyst forecasts, it basically comes down to four things.

• Smelters. Mine supply is scarce, smelting and refining capacity is not. China's surplus smelters keep bidding for whatever concentrate they can get, because idling costs more than losing money on feed. The 2026 benchmark treatment charge is zero and spot sits at minus US$126 a tonne. The International Copper Study Group (ICSG) notes mine output fell 1.1% in the first half, while  the refined market still ran a 98,000 tonne surplus.
• Scrap. Secondary refined production grew 5.6% in the first five months of 2026 against 2.4% for primary. That's basically enough to move the whole balance. The ICSG credited higher secondary output and weaker usage when it flipped its 2026 call from a 150,000 tonne deficit to a 96,000 tonne surplus.
• Grasberg. Freeport originally targeted 771,000 tonnes this year and has since cut 2026 guidance by about a third, with Indonesian concentrate output down 32% in the first half. Freeport sees full production back by end-2027.
• Cobre Panamá. The mine produced 350,000 tonnes in 2022 and is now guided to 30,000 to 40,000 tonnes from stockpiled ore, with First Quantum stressing this is not a reopening. Macquarie's 2027 surplus assumes a June quarter restart ramping to 385,000 tonnes a year. This entire forecast rests on the timing of a political settlement.

The bottom line

At some point copper is going to feel like toilet paper in 2020. This is the data that everyone gets so bulled up on.

There's no arguing that the near-term looks less fun. The US 10-year is pretty much at 5%, the Fed is likely to hike three times over the next six months and Hormuz is still effectively closed. Against that, the path of least resistance for copper, and the broader commodity complex, seems flattish at best.

As for miners, they've re-rated quite aggressively, with a household name like BHP (ASX: BHP) going from ~7x in FY22 to now around 20x. While pure-play copper is thin on the ASX, there are a handful of smaller names that barely get a mention. Marimaca, Austral Resources, 29Metals and Cyprium Metals, among others. One for another day.