The copper market supply gap widens, and red copper prices are expected to break through $13,000/ton in 2026

**Record-high copper prices driven mainly by tight supply**

On December 1, the London Metal Exchange (LME) copper price rose again to $11,292/ton, setting a new record. Since entering 2025, this rally has accumulated a 29% increase, driven primarily by two factors: disruptions in global mine supply leading to tight copper sources, and increased capital support from the Fed's easing expectations.

**Multiple institutions bullish, UBS provides the most aggressive forecast**

UBS Group is the most optimistic about the outlook for red copper prices, with a very aggressive forecast: by March 2026, prices could reach $11,500/ton, rising to $12,000/ton in June, approaching $12,500/ton in September, with a year-end target directly pointing to $13,000/ton. The Chilean National Copper Commission (Cochilco) has also raised its 2026 average price forecast to $4.55 per pound (about $10,030/ton), also hitting a historic high.

**Supply gap expands exponentially, inventory depletion risks emerge**

UBS also significantly revised upward its supply expectations, estimating a copper market deficit of 230,000 tons in 2025, nearly doubling to 407,000 tons in 2026. This forecast reflects the accelerating decline in inventories and ongoing supply risks.

Chile’s state-owned copper producer Codelco recently revealed that the annual contract supply premium in 2026 will be $350 per ton higher than the LME price, compared to $89 agreed upon in 2025, an astonishing increase. Additionally, due to rising US tariff expectations, traders are shipping large amounts of copper to the higher-priced US market, risking depletion of inventories in other regions.

**Arbitrage trading makes a comeback, the US market becomes a new focus**

Copper prices on the NYMEX (COMEX) show a clear premium over LME prices, and this structural difference is expected to persist over the next 18 months. Robin Martin, Head of Market Development at the London Metal Exchange, pointed out that CME contracts have shown a stable 2% to 3% premium, which has become a structural feature of the market.

Kostas Bintas, Head of Metals at Mercuria Energy Group, stated that highly profitable US arbitrage trades are resurging, and US copper imports are expected to increase significantly in the coming months, providing many opportunities for bullish copper investors.

**Future outlook for red copper prices: supply gap and demand expectations support both sides**

Under multiple factors, the logic for continued upward movement of red copper prices in 2026 is quite clear: accelerating depletion of global inventories, expanding supply gaps, regional premium structures forming, and arbitrage trading restarting. Supported by these factors, the copper market is expected to maintain a relatively strong trend.