Copper tariff decision, tungsten supply shortages and Q3 commodity bulls form the core catalysts for this report

Overview

This report is a JPM energy, mining and materials morning-meeting/event summary covering the copper Section 232 tariff decision, iron ore supply disruptions, tight tungsten supply, the rationale for going long commodities in Q3 and China's new-energy system targets. It also lists the previous trading day's commodity and related-stock movers, industry news flow, thematic research links, company takeaways, meetings and catalyst calendar.

Core views

The core views are as follows: First, the copper Section 232 tariff recommendation could become an important two-way catalyst, with JPM's base case bullish and gradual tariff increases from 2027 viewed as supportive for copper prices; the main risk is a return of U.S. inventories if no tariffs are imposed. Second, the rise in iron ore is related to Fortescue cargoes bound for China being affected by stalled CMRG negotiations, prompting buyers to seek alternative sources. Third, tungsten has become a focus because of Chinese export controls, rising demand for etching gases used in AI chips and depleted inventories at Japanese suppliers; prices have risen significantly, but there is also a risk of a pullback if export controls are lifted. Fourth, the Q3 commodity-bull case is driven by position liquidation, seasonal demand, inventory replenishment, Chinese buying and JPM's higher oil-price forecast. Fifth, China's new-energy targets through 2030 continue to support energy storage, offshore wind, nuclear power, green hydrogen and grid equipment.

Analysis framework

The report uses event-driven and cross-commodity strategy analysis, combining policy decisions, supply-chain news, inventories and positioning, rebound patterns following historical drawdowns, seasonal energy demand and China's policy targets to assess directional opportunities in commodity prices and related equities.

Methodology notes

• Macro commodity strategyEvent catalyst and positioning analysis

  Assess the risk-reward profile of Q3 commodities using policy events, inventories, positioning and seasonal factors.

  The report uses the copper tariff decision, Brent net shorts, ETF outflows, declining open interest, summer demand and inventory replenishment as key evidence for upside in commodity prices.

• Value-chain analysisSupply-demand gap analysis

  Assess tungsten supply tightness through export controls, supplier inventories and downstream AI-chip demand.

  The report notes that Kanto Denka and Central Glass account for approximately 24% of global tungsten hexafluoride production; inventories are depleted and difficult to maintain through the end of 2026, while each AI-chip wafer requires more etching gas, amplifying the supply shortage.

• Policy analysisEnergy-target mapping

  Map China's 2030 targets to investment directions in nuclear power, energy storage, green hydrogen and offshore wind.

  The report uses NDRC-related targets to derive medium- and long-term support for energy storage, offshore wind, grid equipment and demand for green electricity.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Copper

  Directly affected by the Section 232 tariff decision

  Strengths

  The base case is for tariffs to rise gradually from 2027, which could support prices.

  Weaknesses

  If tariffs are ultimately not imposed, the return of U.S. inventories could create downside pressure.

  Comparison

  Compared with other commodities, copper's short-term driver is more dependent on the policy decision.

  Risks

  Failure to impose tariffs, inventory release and a policy implementation pace below expectations.

• Iron ore

  Affected by disruption to Fortescue cargoes bound for China and buyers' substitution purchases

  Strengths

  Supply disruptions have driven a short-term price increase.

  Weaknesses

  China's steel output is weak, and channel checks indicate that China's steel production fell 1% month over month on the 10th.

  Comparison

  The current iron ore catalyst is driven more by supply news than by clear demand expansion.

  Risks

  A resumption of CMRG negotiations, weaker steel demand and reversals in shipping or inventory factors.

• Tungsten

  Affected by Chinese export controls, semiconductor-material shortages and amplified AI-chip demand

  Strengths

  Global and domestic Chinese prices have risen sharply, attracting significant investor attention.

  Weaknesses

  The price increase is already substantial; although the stocks are inexpensive relative to NAV, volatility risk is high.

  Comparison

  Compared with copper and iron ore, tungsten is more focused on supply-chain bottlenecks and the semiconductor-material theme.

  Risks

  Removal of export controls, recovery in supply and a pullback from elevated prices.

• Oil and gas equities

  Affected by expectations for higher Q3 oil prices, seasonal demand and inventory replenishment

  Strengths

  JPM expects the average Q3 oil price to reach $86 per barrel, while oil and gas stocks have largely given back their 2026 gains, leaving room for upside.

  Weaknesses

  BCOM has recently performed weakly, and market positioning and risk appetite still need to recover.

  Comparison

  Compared with metals, the oil and gas thesis relies more on macro positioning, inventories and seasonal demand.

  Risks

  Oil prices falling short of expectations, weaker-than-expected seasonal demand and declining risk premiums as geopolitical risks ease.

• China's renewable energy and grid equipment

  Supported by NDRC and new-energy system targets

  Strengths

  Targets of 300 GW of energy storage, 110 GW of nuclear power, 2 Mt of green hydrogen and offshore wind-related indirect targets improve long-term demand visibility.

  Weaknesses

  Some targets may be conservative, and the electricity corresponding to green hydrogen is relatively small compared with the overall scale of wind and solar generation.

  Comparison

  Compared with short-term commodity trading, the new-energy value chain is more driven by policy targets through 2030.

  Risks

  Policy implementation pace, project grid connection and utilization, price competition and equipment orders falling short of expectations.

Key data

• WTI price$70.0 per barrel, up 1.2% on the dayOne of the best-performing commodities in the previous trading session.
• Brent price$72.6 per barrel, up 0.8% on the dayThe report believes that considerable pessimism is already reflected near $70 per barrel.
• JPM Q3 oil-price forecast$86 per barrelJPM's commodity research expects the average oil price to reach this level in Q3 2026.
• BCOM historical drawdown referenceUp 12% two months after the last 15% drawdownThe report uses the 2022 experience to support the case for a Q3 commodity rebound.
• Tungsten price performanceUp approximately 600% globally and approximately 300% domestically in China over the past yearThe increase is related to Chinese export controls and supply-chain tightness.
• Tungsten hexafluoride supplyKanto Denka and Central Glass account for approximately 24% of global productionDigitimes reported that the two companies' inventories were depleted and could not sustain supply through the end of 2026.
• China's 2030 nuclear-power targetApproximately 110 GW of operating nuclear capacityAppearing in an official government plan for the first time, it improves visibility on nuclear-capacity expansion.
• China's 2030 energy-storage target300 GWThe NDRC's previous target was 180 GW by 2027; the report views the 300 GW direction for 2030 as positive.
• China's 2030 green-hydrogen target2 MtBased on 52.5 kWh/kg, this corresponds to approximately 105 TWh of green-electricity demand.
• China's 2025 wind-and-solar generation referenceApproximately 2,600 TWhThe report notes that the electricity demand corresponding to green hydrogen is relatively small compared with China's total wind-and-solar generation.

Impact & implications

For investment implications, copper, tungsten, oil and gas and China's new-energy value chain are the primary areas of focus. If copper tariffs follow a gradual-increase path, copper prices and copper-related equities could benefit; if no tariffs are imposed, the release of U.S. inventories could weigh on copper prices. The tungsten value chain is affected by AI-chip material demand and export controls, creating high short-term interest but also pullback risk if policy restrictions ease. Oil and gas equities have scope for renewed re-rating given expectations for higher oil prices and the retracement of prior gains. China's new-energy targets improve the medium- and long-term visibility of energy storage, offshore wind, grid equipment and selected renewable-energy companies.

Risks

• If copper tariffs under Section 232 are ultimately not imposed, the release of U.S. inventories could weigh on copper prices.
• If tungsten export controls are lifted, tungsten prices and related stocks could retreat from elevated levels.
• The Q3 oil-price upside assumption depends on summer demand, Chinese buying, inventory replenishment and crack spreads all materializing simultaneously.
• Although the direction of China's new-energy targets is clear, project construction, grid connection, utilization and equipment-order fulfillment may involve timing gaps.
• The report is sales- and trading-department material and states that it is not independent research issued by J.P. Morgan Research.

What to watch

• The final decision on the copper Section 232 tariff recommendation, its start date and tariff path.
• Changes in U.S. copper inventories and whether inventory returns occur.
• Progress on Fortescue iron ore cargoes bound for China and CMRG negotiations.
• Chinese tungsten export controls and inventory-recovery conditions at suppliers such as Kanto Denka and Central Glass.
• Brent/WTI prices, open interest, ETF flows and changes in Brent net shorts.
• Detailed policies and order realization related to China's energy storage, nuclear power, green hydrogen, offshore wind and grid equipment.