Pacific Securities has released a research report indicating a projected global copper supply-demand deficit of -50,000, -350,000, and -430,000 tonnes for 2026, 2027, and 2028, respectively. The copper market is characterized by strong fundamentals on both sides, with supply growth expected to lag behind demand expansion. Anticipation of US copper tariff policies has led to a continuous build-up of copper inventories on the Comex, exacerbating the market's supply shortfall. The firm believes that, driven by the global trend towards electrification, copper demand is poised for sustained high growth. Meanwhile, supply increases are constrained by declining ore grades at existing mines and the pace of new project commissioning, suggesting copper prices are likely to remain robust.
Supply Side: Incremental Projects and Recycled Copper Growth Face Grade Decline Constraints
The report analyzes major global copper mine expansion projects over the past three years, estimating combined copper metal increments of 180,000, 530,000, and 640,000 tonnes for 2026-2028. The Democratic Republic of Congo, Zambia, and China are identified as the primary contributors to this incremental supply, while Peru shows limited growth. Chilean copper production faces pressure, and Indonesian output is subject to significant volatility. According to data from Discovery Alert, mature copper mining projects typically experience an average annual ore grade decline of 2%-4% over their lifecycle. The report notes that during periods of high copper prices, companies may offset grade declines by increasing ore processing volumes and improving metal recovery rates. Assuming a 1% annual production decrease from existing projects and a 5% compound annual growth rate for recycled copper output, the firm calculates global copper supply for 2026-2028 at 28.25 million, 28.88 million, and 29.65 million tonnes, representing year-on-year increases of 280,000, 640,000, and 760,000 tonnes, respectively.
Demand Side: Accelerated Growth Driven by Emerging Sectors, High Growth Resumes in 2027
Based on International Copper Study Group (ICSG) data, global refined copper demand has risen from 23.48 million tonnes in 2016 to 28.16 million tonnes in 2025, achieving a compound annual growth rate of 2.04%, with an accelerating trend in recent years. The primary sources of incremental copper demand in emerging sectors are identified as automobiles, photovoltaics, wind power, and data centers. The firm estimates demand from these sectors will reach 7.71 million, 8.44 million, and 9.06 million tonnes for 2026-2028. For other segments, the report applies compound annual growth rate assumptions of 3% for power grids (including electronic equipment), -1% for construction, 1% for other transportation equipment, 1% for engineering machinery, and 0% for other sectors. Based on these calculations, total global copper demand for 2026-2028 is projected at 28.29 million, 29.23 million, and 30.08 million tonnes, representing year-on-year increases of 130,000, 940,000, and 850,000 tonnes. Copper demand is expected to resume high growth in 2027.
Supply-Demand Balance: Widening Deficit, US Stockpiling Intensifies Tightness
The firm's calculations point to copper supply-demand deficits of -50,000, -350,000, and -430,000 tonnes for 2026, 2027, and 2028, respectively. This reflects a market with strong underlying supply and demand, where supply growth is forecast to trail demand growth. Expectations of US copper tariff policies have prompted ongoing stockpiling of copper concentrate in the US market. Comex copper inventories surged from 93,000 tonnes at the beginning of 2025 to 498,000 tonnes by year-end, a net increase of 405,000 tonnes. By the end of June 2026, Comex inventories stood at 666,000 tonnes, a net increase of 168,000 tonnes since the start of the year. This anticipated policy action is seen as intensifying the copper market's supply gap.
Investment Outlook
Benefiting from the global shift towards electrification, copper demand is anticipated to sustain high growth. Supply growth is primarily expected from new mining projects and increased recycled copper output, creating a market with robust fundamentals on both sides. However, constrained by declining grades at mature operating mines and the commissioning timelines of new projects, supply growth is likely to lag behind demand, supporting the continuation of strong copper prices.
Risk Factors
Key risks include demand falling short of expectations, the impact of US copper tariff policies, and a larger-than-anticipated release of supply.
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