The International Copper Study Group (ICSG) changed its 2026 outlook last autumn, shifting from a forecast surplus to a forecast deficit. This change supports expectations of a tighter copper market.
The ICSG’s first outlook for 2027 is expected to point to further tightening, with the possibility of a persistent shortage. The copper price has already recovered from a setback in March.
Refined copper output in China is still expected to rise. Even with higher Chinese production, the market outlook remains focused on supply constraints into 2027.
The market outlook for copper is tightening, and we see a clear deficit forming for the rest of 2026. This view is supported by the International Copper Study Group, which is also expected to forecast further shortages into 2027. This fundamental backdrop suggests the price recovery we saw after the March pullback has strong support.
To add credibility to this view, we can see that LME copper inventories have recently fallen to a critical 18-month low of around 85,000 tonnes. At the same time, the Global Manufacturing PMI has remained in expansionary territory above 50 for the third consecutive month. This combination of shrinking supply and rising industrial demand points to continued price strength.
For traders, this outlook suggests positioning for upward price movement in the coming weeks. We believe it is a good time to consider buying call options or establishing bull call spreads with expiries in the third quarter. This allows for participation in the expected medium-term rally while managing risk.
Looking back, the price action we observed through late 2025 showed a similar pattern of consolidation followed by a sharp uptrend. The recent rebound from the dip in March 2026 confirms that buying interest remains strong. History suggests that when supply forecasts tighten this significantly, the subsequent price move can be swift.
Demand from the green energy and technology sectors continues to exceed earlier projections. Global EV sales data for the first quarter of 2026 showed a 15% year-over-year increase, and the build-out of new AI data centers is adding an unexpected layer of copper consumption. These are not short-term trends but structural shifts in demand.
On the supply side, disruptions are proving difficult to resolve, further squeezing the market. Ongoing labor negotiations in Peru and lower-than-expected ore grades from key mines in Chile have constrained raw material availability. Even with Chinese refined copper output rising, it appears insufficient to cover the global shortfall.
