The metal copper, often referred to as "Dr. Copper" by the industry, is caught in a contradictory situation. On one hand, supply constraints driven by geopolitical factors have pushed prices back towards the $13,000 per tonne mark. On the other hand, record-high inventory levels are sounding alarms about weak demand.
The supply shock stems from the ongoing blockade of the Strait of Hormuz. Since the escalation of US-Iran conflict, the global sulfur supply chain has fractured, causing a sharp price surge for sulfuric acid, a key raw material for hydrometallurgical copper production. This situation seriously threatens smelting capacity in major copper-producing regions like Chile and the Democratic Republic of Congo (DRC). Goldman Sachs has warned that if logistics disruptions persist, the DRC's 2026 output could decrease by 125,000 tonnes, representing approximately 0.5% of global supply.
However, in stark contrast to the supply risks, market demand shows weakness. Although copper prices have rebounded strongly from their mid-April lows, the global refined copper market was still in a surplus of 276,000 tonnes in February. Analysts project this surplus could persist until 2027. As the world's largest copper consumer, China saw its refined copper production hit a record high of 1.33 million tonnes in March. Concurrently, however, imports fell to their lowest level since 2011. This unusual combination of high output and low imports is making the signals from Dr. Copper about future price trends increasingly ambiguous.
Comments