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Investing.com -- Copper prices are set to stay elevated as supply disruptions and a weakening U.S. dollar tighten the market into 2026, according to Morgan Stanley.
The bank told investors in a note Wednesday that “a weakening dollar and supply disruptions at major copper producers are pushing metal prices higher,” prompting it to revise price targets and upgrade Southern Copper and Penoles to Equal Weight.
Morgan Stanley cited “incidents earlier this year at Ivanhoe’s Kamoa-Kakula, Codelco’s El Teniente, and most recently Freeport’s Grasberg Block Cave,” which are expected to constrain global supply.
The firm’s commodity team now forecasts “2026e prices of $4.83/lb roughly in-line with spot prices of $4.85/lb, but well above the YTD average of $4.34/lb.”
Due to limited options for exposure to copper, Morgan Stanley said it “no longer expect[s] SCCO to underperform,” and sees shares “trading at an elevated premium multiple to their historical average.”
The analysts set a new mid-2026 price target of $132 a share, adding that there could be “upside to our dividend estimates given controlling shareholders’ cash needs for potential M&A.”
Penoles was also raised to Equal Weight as it is “once again trading at a discount to its SoP,” despite strong year-to-date performance. Morgan Stanley noted the stock’s “current SoP discount is well below the historical average.”
The bank said its commodities team remains “constructive on copper as they see macro and micro support, with material supply disruptions pushing the market into a large deficit in 2026.”
Morgan Stanley added that potential downside risks include “a deceleration in global growth resulting from U.S. tariffs,” while Chinese stimulus or lower rates could lift prices further.