Copper price forecast at $5.75 in H2 2026: RBC

Key Concepts

• Leaching: A hydrometallurgical process used to extract copper from low-grade ore using sulfuric acid.
• Seaborne Sulfur: Global sulfur transported via maritime routes, critical for the production of sulfuric acid in mining.
• African Copper Belt: A major copper-producing region that relies heavily on imported sulfur from the Middle East.
• Care and Maintenance: A status for a mine that is temporarily closed but maintained to allow for a potential future restart.
• Free Cash Flow: The cash a company generates after accounting for cash outflows to support operations and maintain capital assets.

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Copper Market Outlook and Supply Dynamics

Sam Crittenden of RBC Capital Markets identifies a fundamental imbalance in the copper market: supply is struggling to keep pace with demand. While 2025 and 2026 saw significant mine shutdowns that continue to constrain current output, the market remains resilient.

• Economic Correlation: Copper prices are highly sensitive to global growth. Recent IMF reports lowering global growth forecasts present a potential "overhang" or risk to the price.
• Price Forecasts: RBC projects copper at $5.75 USD/lb for the second half of 2025, with an expected increase to $6.00 USD/lb in 2027. The optimism for 2027 is driven by a lack of new supply projects coming online after 2025, coupled with an anticipated improvement in demand.

The Sulfur Supply Chain Risk

A critical, often overlooked factor in copper production is the availability of sulfur.

• Middle East Dependency: Approximately 50% of global seaborne sulfur originates in the Middle East.
• Operational Impact: The African Copper Belt, which accounts for 7% of global copper supply, is particularly vulnerable as it relies on imported sulfur to produce the sulfuric acid required for leaching.
• Inventory Buffer: Current industry inventories are estimated to last only a few months. A prolonged closure of shipping routes in the Persian Gulf could lead to significant supply disruptions, which Crittenden suggests is currently providing a "floor" for copper prices.

Company-Specific Analysis and Investment Perspectives

Crittenden highlights three mining companies with distinct operational narratives:

1. Hudbay Minerals:

   • Strategy: Favored for its dual exposure to gold and copper.
   • Key Asset: The Manitoba operation produces ~200,000 oz of gold annually, providing strong free cash flow.
   • Growth: The "Copper World" project in Arizona is expected to begin construction later this year, positioning the company for significant copper production growth.

2. Capstone Copper:

   • Turnaround Potential: The company faced recent setbacks, including motor failures at the Mantoverde mine in Chile and a labor dispute in January.
   • Outlook: Operations are expected to normalize, with production improvements anticipated by Q4 and into 2027 as the company accesses higher-grade ore.

3. First Quantum Minerals:

   • Panama Operations: The company is working toward a restart of its Panama mine.
   • Recent Progress: The government has authorized the processing of existing ore stockpiles, allowing the mill to resume operations at a minimal capacity. This helps offset "care and maintenance" costs. An upcoming environmental audit is viewed as a critical step toward broader negotiations for a full restart.

Synthesis and Conclusion

The copper market is currently defined by a tug-of-war between macroeconomic fears—specifically slowing global growth—and structural supply constraints. While the conflict in the Persian Gulf poses a threat to the global economy, it simultaneously creates a supply-side risk for copper via the sulfur bottleneck. Crittenden concludes that if demand remains stable, the lack of new supply projects will likely drive prices higher in the long term, particularly as mining operations like those of Capstone and First Quantum work through their respective recovery phases.