Global copper market Report Interpretation

Overview

This global metals weekly focuses on copper’s tight physical market, the concentration of refined inventories in the US, and China’s transition from property-led investment toward power-grid, electrification and digital infrastructure. BofA remains constructive on copper into 2027, while identifying weak near-term Chinese fixed-asset investment and softer manufacturing conditions as constraints.

Core views

BofA argues that copper’s rally reflects both a fundamental supply deficit and an unusual relocation of refined metal into the US. Tight mine supply leads the bank to expect a 397kt global copper shortfall in 2026, after a 178kt surplus in 2025; it forecasts global production of 27.955Mt and consumption of 28.352Mt in 2026. The bank’s LME cash-price forecast is US$13,331/t for 2026 and US$15,500/t, or US$7/lb, for 2027. The report identifies the US as the global sink for refined copper. Imports rose sharply from 2Q25 and shipments under bills of lading reached an all-time high in July as traders positioned for possible refined-copper tariffs. BofA estimates that excess imports have left the US storing more than 1.2Mt of refined copper. While tariff expectations initially drove shipments, the report argues that the current CME curve is enough to retain metal: steep contango supports warehouse-financing trades in which metal is bought at cash prices and sold forward. In contrast, low inventories in China and on the LME, elevated cancelled LME warrants, and LME backwardation signal tight nearby availability outside the US. BofA sees two main conditions that could induce re-exports from US warehouses: stronger nearby demand that flattens the CME curve, or a further increase in LME prices that compensates traders for moving metal. However, it considers the financing trade a relatively stable equilibrium, with inventories likely to be worked down over time in response to real demand rather than through an abrupt market disruption. The report compares this mechanism with the aluminium market’s experience in the past decade. Chinese copper demand is the main near-term uncertainty. The bank’s real-time tracker indicates that demand growth eased steadily in 2Q26, while apparent refined-copper demand—defined as refined production plus imports less exports and stock changes—grew only 2.4% year-to-date. Persistent property weakness remains important, and electricity-sector fixed-asset investment has also slowed. Yet property now accounts for less than 10% of Chinese copper consumption, versus 30-40% at its peak, reducing the metal’s direct exposure to housing. BofA believes the grid-investment slowdown should be temporary. State Grid Corporation of China outlined approximately RMB4tn of investment for the 15th Five-Year Plan in 2026-30, around 40% above 2021-25. Priorities include ultra-high-voltage transmission, annual connection of roughly 200GW of wind and solar capacity, pumped-hydro and battery storage, and distribution and smart-grid upgrades. The bank also cites an estimated RMB25tn of Six Networks investment over 2026-30 across energy, computing, communications, logistics, water and urban infrastructure. This represents a shift from steel- and cement-intensive property construction toward electrification, technology and digital infrastructure, which BofA considers more supportive for copper and aluminium. The transition does not remove near-term macro pressure. Total Chinese fixed-asset investment was down 6.7% year-to-date, with manufacturing investment down 1.7% and infrastructure investment down 4.1%. Infrastructure expenditure contracted 5.1% year-on-year in the first seven months of 2026 despite a 1.3% increase in headline public expenditure. AI-related capital expenditure is estimated at RMB915-980bn in 2026, or about 0.4-0.5% of GDP, and is still too small to offset the absolute decline in property investment. Nevertheless, BofA argues that grid spending can offset the housing drag specifically for copper demand; a reacceleration in fixed-asset investment remains a precondition for higher copper prices. Manufacturing signals are mixed but not decisively negative for metals. Average PMIs remain above 50, while US manufacturing is still expanding despite weaker orders, backlogs and imports, rising input costs and policy uncertainty that could deter restocking from low supply-chain inventories. China’s manufacturing PMI rose to 49.8 in August from 49.2 in July; new orders increased to 50.6 from 48.5 and production to 50.4. High-tech manufacturing remained relatively strong at 52.9, and electrical machinery and electronics showed production and new-orders readings above 53, whereas construction remained weak. BofA therefore maintains its constructive copper forecast despite the uneven demand backdrop.

Analysis framework

The report combines global copper supply-demand balances, exchange and estimated domestic inventory trends, import data, forward-curve analysis and Chinese macro-investment indicators. It links warehouse economics and regional inventory movements to physical availability, then assesses Chinese property, grid, infrastructure and AI investment as drivers of future copper demand.

Methodology notes

• Industry AnalysisSupply-demand framework

  Global copper supply-demand balance forecasting

  BofA compares projected global production and consumption to estimate annual deficits or surpluses, inventories and the implied price backdrop.

• Fixed Income and CreditYield curve analysis

  CME and LME forward-curve and warehouse-financing analysis

  The report uses contango and backwardation to explain incentives to store copper in the US or release it into other markets; forward prices reflect cash prices, carrying costs and the value of immediate metal availability.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Investment composition and metals-demand transmission

  The report assesses how a shift from property construction toward grids, storage, renewable integration and digital infrastructure changes demand for copper relative to steel and cement.

Asset mapping & comparison

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

• Copper

  The report is constructive on copper because expected deficits, tight mine supply, US inventory absorption and electrification-related Chinese investment support the market.

  Strengths

  Expected 2026 and 2027 deficits; more than 1.2Mt of refined copper held in the US; low China and LME inventories; grid and Six Networks investment support.

  Weaknesses

  Chinese demand growth has slowed, with weakness in property and electricity fixed-asset investment.

  Comparison

  China’s investment mix is expected to favor copper and aluminium more than steel and cement.

  Risks

  Sharper global-demand slowdown, trade-war effects on sentiment, equity-market correction, or weaker-than-expected Chinese investment and restocking.

Key data

• US refined copper inventories+1.2MtEstimated inventory build from imports above longer-term averages.
• China apparent refined copper demand growth2.4% YoY YTDGrowth slowed sharply in 2Q26.
• 2026 global copper balance-397ktBofA forecast deficit; production of 27.955Mt versus consumption of 28.352Mt.
• 2027 LME cash copper forecastUS$15,500/t (US$7/lb)BofA’s reiterated 2027 forecast.
• State Grid 15th Five-Year Plan investmentapproximately RMB4tn (US$550-575bn)Planned 2026-30 investment, about 40% above 2021-25.
• Six Networks investmentRMB25tnEstimated new investment during 2026-30.
• China fixed-asset investment-6.7% YoY YTDManufacturing investment declined 1.7% and infrastructure investment declined 4.1%.
• China AI-related capexRMB915-980bnEstimated 2026 spending, roughly 0.4-0.5% of GDP.

Impact & implications

The report sees US warehousing and depleted inventories elsewhere as reinforcing copper tightness independently of a final tariff decision. Over time, BofA expects China’s investment mix to become more copper-intensive through grids, renewable integration, storage and digital infrastructure, although a near-term recovery in fixed-asset investment is needed to strengthen the demand case further.

Risks

• BofA identifies the risk that global demand slows sharply into next year.
• Trade wars could weaken market sentiment.
• An equity-market correction could pressure copper sentiment.
• Chinese grid spending and broader investment may fail to reaccelerate as expected.
• A stronger-than-anticipated demand recovery, supply-chain restocking or further production disruptions would be upside risks to the copper outlook.

What to watch

• Whether CME contango remains sufficiently wide to sustain warehouse-financing incentives and retain copper in the US.
• Whether nearby demand flattens the CME curve or higher LME prices incentivise copper re-exports.
• China’s grid investment, fixed-asset investment and implementation of the Six Networks programme.
• Chinese property activity and the extent to which grid spending offsets housing-related copper demand.
• US and Chinese manufacturing indicators, orders and supply-chain restocking behavior.