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Investing.com - A structural bull case is unfolding in copper, according to analysts at UBS, and further price gains are likely next year.
“Copper remains our top pick among industrial metals and is a key driver behind our upgrade of commodities to ‘Attractive’ from ‘Neutral.” said analysts at UBS, in a note dated Nov. 21.
Copper remains vital to the global economy, supporting electrification and growth across sectors, the Swiss bank said. The shift of major economies toward renewable energy, along with emerging demand from data centers, is expected to drive strong, long-term copper demand.
“We therefore now expect global copper consumption to grow by 2.8% in both 2025 (up from 2.2%) and 2026 (down from 2.9%). We see some downside risks to our demand forecasts, as higher copper prices may curb demand,” UBS added.
The Swiss bank has raised its quarter-end March 2026 forecast by $750/mt, and its June and September 2026 forecasts by $1,000/mt to $12,000/mt and 412,500/mt, respectively, and has also introduced a new December 2026 target of $13,000/mt.
“We favor selling downside price risk or maintaining a long position in the metal,” UBS said.
At 08:30 ET (13:30 GMT), Copper Futures traded 1.8% higher at $10,949/mt, having risen nearly 25% year-to-date.
Supply-side risks will likely persist into 2026—the recovery in production will likely depend on Grasberg and Ivanhoe’s Kamoa-Kakula mines— while grade declines continue to challenge output at Collahuasi (Chile). Meanwhile, Peruvian production has recovered somewhat to be up 2.7% y/y during January to August.
The bank has trimmed its forecasts for refined copper production growth to 1.2% this year (from 1.3% y/y) and 2.2% next year (from 2.8% y/y), led by expansion in China and the Democratic Republic of Congo (DRC).
“While mine supply from the DRC is expected to grow, reliable access to electricity remains a major challenge for both existing and new mines,” UBS said.
On the demand side, global manufacturing PMIs show a modest expansion and China remains the key driver of global copper demand growth, supported by robust consumption in end-use sectors like electric vehicles, renewables, and appliances.
In the short term, the bank acknowledges that Chinese demand has hit a soft patch, but it expects power grid investment to remain robust.
“In contrast, demand from Europe and the U.S.—across autos, manufacturing, and construction—remains subdued, partly due to trade uncertainty and elevated copper prices disrupting the recovery. German infrastructure plans remain a key near-term upside risk for copper demand, and U.S. consumption is expected to gradually recover,” UBS added.