Deutsche Bank has issued a notable forecast regarding the global copper market, projecting a substantial price increase to approximately $10 per pound, or $22,050 per tonne, by the second quarter of 2027. This projection represents nearly a 50% rise from current price levels and is attributed to an anticipated shift from traditional supply-demand dynamics to an inventory and liquidity squeeze. The bankโs analysis suggests that the market is heading towards acute scarcity in the coming months as readily available inventories decline to critical levels.
The report highlights that the primary mechanism for market rebalancing under these conditions would likely be demand destruction, necessitating a price point high enough to sufficiently curb consumption. For retail traders engaging in commodities via CFDs, understanding such long-term fundamental shifts can provide crucial context, even if their trading horizons are shorter. Similarly, those interested in cryptocurrency markets might observe how scarcity narratives in traditional commodities can sometimes parallel discussions around digital assets.
Factors Contributing to Reduced Availability
- Strategic Reserves: China is estimated to have accumulated approximately 2.05 million tonnes of copper in strategic reserves, effectively removing a significant volume from the active market.
- US Inventory Build-up: US copper inventories have expanded, partly due to the ongoing threat of tariffs, making it economically advantageous to import and store the metal. Deutsche Bank estimates that by the end of the year, the US could have effectively locked up 1.3 million tonnes.
- Encumbered Inventories: Combining these factors, Deutsche Bank projects that by the close of 2026, roughly 71% of global above-ground copper inventories will be considered โencumbered,โ meaning they are not freely available for market transactions. This significantly reduces the pool of genuinely free-floating copper.
The bankโs assessment suggests that headline inventory figures may not accurately reflect the amount of copper actually accessible to the global market. This distinction between reported and truly available stock is central to their forecast of an impending supply crunch.
Ultimately, this outlook points to a period of potential tightness in the copper market, driven by structural issues related to inventory accessibility rather than just immediate production shortfalls, which could have implications for industrial consumers and commodity market participants.
๐ฐ Based on reporting from: ForexLive โ