Unconditional Framework Analysis: October Copper Outlook (Part II)

Summary: The U.S. is actively stockpiling copper, while other regions are genuinely consuming it; rising U.S. inventories do not signal global supply ease. II. Auxiliary Factors (affect only volatility magnitude—not the primary trend direction) 3. The U.S. Dollar The Fed raised rates by 25 basis points in September; its dot plot signals one more hike this year. However, the September nonfarm payroll report fell significantly short of expectations, markedly cooling market expectations for a rate hike in October. A rate hike in the weeks before the U.S. presidential election would conflict with Trump’s stated desire to lower financing costs. Vice Chair Philip Jefferson’s hawkish comments serve mainly to preserve the option of hiking—not to signal an imminent move. Summary: The dollar will not shift copper’s primary trend direction for now—only its volatility. If expectations for an October hike continue to recede, that would become a bullish catalyst for copper prices. 4. Mine-Side Supply The 2026 long-term copper concentrate treatment charges (TCs) have been set at $0/ton—the first time in industry history. Spot TCs remain weak, having stayed negative for 30 consecutive weeks. Smelters processing spot copper concentrate are already operating at a loss; those relying on long-term contracts remain profitable—but the impact has already begun affecting output: China’s refined copper production declined month-on-month in September, and SMM forecasts further declines in October. Ongoing mine disruptions include: Centinela copper mine’s first-ever strike scheduled to begin October 13; a production accident at Codelco’s Radomiro Tomic mine in Chile; and heightened strike risks at Escondida. Together, these three major mines account for over 7.5% of global copper mine output; global mine copper production is down slightly year-on-year. Summary: Mine-side tightness is a reality—not merely a market expectation. Yet this remains an auxiliary variable; the dominant trend is determined by demand and inventory cycles. 5. Downstream Fabrication Activity With copper prices near record highs, downstream enterprises are purchasing only to meet immediate needs and show little willingness to build inventories. Domestic social inventories stand at historically low levels for this time of year. This round of inventory drawdown stems primarily from constrained raw material supply—not from a surge in end-user demand. Copper tube demand remains weak; electrolytic copper rod demand is neutral; copper plate & strip and copper foil demand are relatively strong. Downstream activity is unlikely to meaningfully drag on prices—but also unlikely to drive sharp price gains on its own. 6. Fund Positioning Congestion As of the week ending September 29, COMEX copper speculative net long positions stood at 78,709 contracts—a decrease of 3,940 from the prior week. Net long positioning has eased somewhat, yet remains elevated in absolute terms. In simple terms: existing longs have not exited en masse, but new external capital has not flooded in either. III. Incorporating the U.S. Presidential Election into This Analysis The election’s impact on copper prices lies not in who wins—but in how policy leans during the pre-election period: conservative and disinclined toward bold moves. The U.S. Section 232 copper tariff investigation is highly likely to be shelved amid election-cycle timing. The White House is unlikely to impose substantial new copper tariffs before the election; instead, any final decision will probably be deferred until after the election. Thus, the current tariff-related premium embedded in copper prices will remain suspended—neither quickly realized nor abruptly erased. The dollar’s trajectory is similarly constrained by the election. If markets converge on the view that the Fed will hold rates steady before the election, the earlier pricing-in of rate hikes will unwind, pushing the dollar lower and easing upward pressure on copper prices. Fiscal policy in election years naturally prioritizes growth stabilization and job preservation. As copper is designated a critical strategic resource for the U.S., policy support provides implicit underpinning—but no direct, forceful stimulus.

Copper Prices Near All-Time High! UBS Maintains Bullish Stance: “Still Our Highest-Conviction Commodity Theme”

London copper futures closed near their all-time high on Friday, prompting multiple Wall Street institutions to issue warnings: global copper supply continues to shrink, and prices may rise further. Théa Ziegler, a member of UBS’s U.S. equity advisory sales team, wrote in Friday’s report: “Copper remains one of our highest-conviction commodity themes.” She noted that demand growth driven by electrification and data center construction is expected to persistently outpace supply growth—leaving copper’s structural support intact. Electrification, data center development, and ongoing supply constraints will continue to bolster copper’s long-term constructive outlook. For investors, the core conclusion is: supply growth over the coming years is expected to lag behind demand growth—supporting elevated copper prices—even as tariffs and trade policy uncertainties persist in the near term. On Friday, copper closed at approximately $14,622 per ton. Théa Ziegler believes the copper supply deficit will extend into the early 2030s. Meanwhile, Chilean mine strikes and globally depleted inventories are converging—further compressing the market’s buffer capacity. Chilean Strikes Sound the Supply Alarm Natalia Corfield, Head of Latin American Corporate Credit Research at J.P. Morgan, noted this week that Chile’s Centinela copper mine has already entered a strike.

Copper Gains on Easing Rate-Hike Bets and Chile Mine Avalanche

Oct 11, 2026

Copper prices climbed amid interest rate optimism and a fatal avalanche at Codelco’s El Teniente mine in Chile, halting operations and tightening supply amidst rising global demand.

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Copper Gains on Easing Rate-Hike Bets and Chile Mine Avalanche

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