1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 44
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
Central bank net purchases, 4qtr sum
mt
1400
1200
1000
800
600
400
200
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Source: Bloomberg L.P., Scotia Wealth Management.
Copper
Supply-side underperformance materially tightens copper (Cu) market. While we remain cautious on the
near-term outlook for global Cu demand given the uncertain macroeconomic backdrop, especially as
trade war risks continue to hang over key economic regions, surprisingly resilient consumption to date
offers hope that a painful economic slowdown can be avoided (recent interest rate cuts offer further
support). Despite heightened demand risks, we continue to see very strong pricing support for Cu given
reasonably low inventories and the impact of elevated supply-side underperformance (2025 disruptions
are on track for >6.0%, a 17-year high), highlighted by multi-year operating setbacks at four of the world’s
largest mines – Grasberg in Indonesia, El Teniente and QB2 in Chile, and Kamoa-Kakula in the DRC (a
combined 1.86Mt or 8.1% of mine supply in 2024; we forecast only 1.39Mt and 1.44Mt in 2025-2026). Due
to these large disruptions, we anticipate a significantly tighter market in 2026, which is likely to support
higher prices, particularly in H1. We note that our forecast 2026 market deficit of 384kt represents the
largest absolute deficit since 2004 and the largest deficit as a percentage of annual demand (1.4%) since
2010. Moreover, this squeeze could be extended if Cobre Panama (~400ktpy Cu) does not restart as
expected in H2/26. After 2026, we forecast a market in a multi-year modest deficit position under a
relatively unassuming demand scenario, before it transitions to a large structural deficit by 2029-2030
driven by a lack of major supply growth. We estimate that a global consumption growth CAGR of only
1.6% pa is sufficient to keep the market in balance over the 2025-2027 period (vs. +2.4% and +3.6% in
2023-2024; long-term growth of +2.9% pa). We forecast relatively modest average 2025-2030 demand
growth of +2.0% pa (including only +1.2% pa in China). We forecast very robust 2026-2029 Cu prices of
$5.25/lb, $5.00/lb, $5.25/lb, and $5.50/lb, respectively.
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