The copper market is tighter than you think -- Scotia

§ 01 Executive Snapshot

• What: Scotiabank has raised its copper price forecasts, indicating a tighter copper market.
• Who: Scotiabank's metals team, led by Orest Wowkodaw, and copper miners like First Quantum (FM).
• Why it matters: The analysis suggests a multi-year net deficit in copper supply, which could significantly impact prices and investment in copper mining.

§ 02 Key Developments

• Scotiabank projects a near-term price squeeze towards $7.00/lb for copper, with spot prices currently around $6.12.
• The bank's new forecasts for 2026-2029 are $5.95, $6.00, $5.75, and $6.00/lb, averaging a 10% annual increase.
• Planned growth capital expenditure for copper mining is projected to drop by 49% from $14.7B/yr (2023-2025) to $7.4B/yr (2026-2028).

§ 03 Strategic Context

• The copper market has historically seen demand growth averaging +2.9% per annum since 1960, with recent demand driven by sectors like data centers and defense.
• Current supply issues stem from long lead times for new mines and declining production in major mining countries like Chile, which produced 5.42 million tonnes in 2025, down 7.9% year-over-year.

§ 04 Strategic Implications

• Immediate implications include potential price spikes due to tight supply conditions and rising demand, leading to increased attractiveness of copper miner stocks.
• Long-term operational implications suggest that if mining production and scrap supply do not meet demand growth of ~1.9% annually, the market could face a surplus and falling prices.

§ 05 Risks & Constraints

• Risks include potential delays in new mine developments and the impact of global growth rates on copper demand, particularly concerning a declining population in China.
• Regulatory risks associated with potential tariffs on refined copper imports may also affect market dynamics and pricing.

§ 06 Watchlist / Forward Signals

• The conclusion of the Section 232 probe on refined copper imports is expected by the end of the month, which could influence supply dynamics.
• Monitoring the development and operational timelines of new mining projects such as Copper World, Santa Cruz, and Santo Domingo will be crucial for future supply forecasts.