Copper’s physical market is showing signs of an increasingly severe supply squeeze even as mining equities remain cautious, according to RBC Capital Markets.
Spot copper advanced 4.3% to US$6.73/lb over the week while copper equities fell 2.6%, widening the disconnect between the commodity and producers.
RBC said the LME spot-to-3-month futures spread reached US$0.30/lb, the steepest premium since the 2021 squeeze that prompted emergency exchange intervention.
Supply disruptions have continued to accumulate. A boiler failure affected Indonesia’s PT Smelting Gresik facility, which processes Grasberg concentrate, while Antofagasta cut 2026 production guidance to 625,000-655,000 tonnes from 650,000-700,000 tonnes following storms that halted Los Pelambres.
Furthermore, Codelco has also abandoned its plan to produce 1.34 million tonnes this year.
RBC said the supply outlook was deteriorating simultaneously across major copper-producing regions, although Chinese demand remains an important counterweight. China’s July unwrought copper imports fell 11.5% year-on-year to 425,000 tonnes, while industrial production growth slowed to 4.5% from 5.3%.
Mining equities appear to be pricing in considerably lower copper levels than spot. RBC’s modelling implies copper prices of US$5.62/lb for First Quantum, US$5.60 for Freeport, US$5.21 for Capstone, US$5.20 for Lundin Mining, US$4.53 for Hudbay and US$3.83 for Ivanhoe Mines.
RBC forecasts copper at US$5.83/lb in 2026 and US$6.00/lb from 2027-2029, with a long-term assumption of US$5.00/lb.
