Copper prices may surge another 50%, predicts Deutsche Bank; supply to users could exhaust by 2028

The copper market is entering a phase where the biggest concern is no longer how quickly demand is growing, but how much metal is actually available to meet it.

With global copper inventories at historic lows, Deutsche Bank says the market is moving away from a “demand-driven” dynamic towards a “supply liquidity crisis”, as buyers compete to secure an increasingly limited pool of spot supply.

Analyst Daniel Ghali calls the current environment a “historic scramble for metal” and expects copper prices to climb to $22,050 per metric ton by the second quarter of 2027, more than 50% above current levels.


Ghali warns that the squeeze could become even more pronounced if stockpiling continues at the current pace. Under that scenario, copper supply available to other global users could be exhausted by late 2028. There is, however, a mechanism that could eventually ease such an extreme outcome: higher prices.

According to Ghali’s latest analysis, the market is facing several pressures simultaneously: continued U.S. stockpiling, further restocking demand, significant disruptions to refined copper supply and an unexpectedly tight global supply-demand balance.

The result is a fundamental shift in how copper is being priced. With inventories being drawn down, the market is becoming less about “demand growth” and increasingly about who can secure the available metal. That is also making prices more vulnerable to disruptions on the supply side.

The distribution of copper inventories is adding another layer of pressure. Deutsche Bank estimates that, if current trends continue, copper inventories held by the United States and major Asian consumer markets could account for 71% of total global supply by year-end.

China has been accumulating strategic copper reserves for decades. At the same time, the threat of U.S. tariffs on copper imports is encouraging more metal to move into American warehouses. That leaves less spot supply available to consumers in other regions.

And even if the United States ultimately decides not to impose copper tariffs, that does not necessarily mean the metal accumulated in the country will return to the wider global market. U.S. copper futures currently trade at a premium to the London Metal Exchange (LME), while the LME itself maintains warehouses in the United States. This means copper that has moved into the U.S. system could continue circulating between American storage locations rather than flowing back into other markets, even if the U.S. premium narrows.

If copper becomes expensive enough, some end users could begin replacing it with aluminium. While aluminium has lower electrical conductivity than copper, its cost advantage could encourage substitution as prices rise.

The key issue is that current copper prices are still not high enough to trigger large-scale substitution, Deutsche Bank says.

Until prices reach a level that materially changes end-user behaviour, the market could therefore remain caught between dwindling available inventories and competition for the remaining spot supply, keeping supply tight and continuing to support copper prices.

How did copper get here?

Copper demand has accelerated sharply, driven by structural trends such as electrification, artificial intelligence, defence spending and urbanisation across emerging markets. At the same time, supply remains constrained, creating a combination of rigid long-term demand and limited supply that could push baseline market-clearing prices higher. According to the report, current market conditions resemble the early stages of previous multi-year commodity cycles.

The Iran conflict has added further pressure to an already tight supply picture. A less-discussed factor behind the recent copper rally is the growing shortage of sulfuric acid, a key input in copper extraction and refining, particularly in heap leaching operations. Nearly half of the world’s seaborne sulfur supply comes from the Middle East, while disruptions around the Strait of Hormuz have significantly tightened availability.

Chile, the world’s top copper producer, has been at the centre of the disappointing supply performance, reporting its weakest second-quarter output in at least 19 years. The country has cut its full-year production forecast for a second consecutive quarter and now expects output to decline 2.6%. Meanwhile, the International Copper Study Group expects global mine supply to grow 1.6% this year.

Jefferies analysts said the latest industry production results reinforce their view that mine output remains tightly constrained. They added that risks to overall supply remain firmly skewed to the downside, even as some major operations ramp up production.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.