• BNP Paribas forecasts copper could rise to around $14,000 per ton in Q2, driven more by investor speculation than supply-demand strength.
  • The bank warns the market remains oversupplied, with the surplus likely to persist, and expects the rally to fade in the second half of 2026.
  • LME copper traded at $13,012 per ton, down 0.2%, reflecting cautious sentiment amid geopolitical and policy uncertainties.

Speculative Momentum Over Fundamentals

Copper prices have been volatile in early 2026, with a potential spike to $14,000 per ton on the horizon, according to BNP Paribas. The French bank attributes the possible rally largely to speculative trading and geopolitical sentiment, including hopes for progress in Middle East peace talks, rather than a tightening of physical supply. In a note to clients, BNP Paribas cautioned that the underlying market is oversupplied and that surplus conditions are likely to persist, meaning any price surge may be short-lived.

"The rally we're seeing is more about momentum and sentiment than real demand," a BNP Paribas analyst said. "Without a fundamental shift in supply-demand dynamics, we expect prices to correct as the year progresses." The bank forecasts an average of $13,800 per ton in the second quarter, dropping to $12,650 by Q4 as fundamentals reassert themselves.

Market Context and Drivers

LME copper edged lower to $13,012 per ton on Tuesday, down 0.2%, as traders weighed the mixed signals. The recent price action has been influenced by mine disruptions and ore-grade declines in key producing regions, which have tightened near-term supply. However, demand from top consumer China has shown signs of softening, with physical premiums declining even as financial markets push prices higher. Policy uncertainty, including tariff threats and shifting green-energy incentives, has added to volatility, driving speculative inflows.

"Investors are betting on a supply crunch, but the data doesn't fully support that yet," said a commodities strategist at a rival bank. "We've been here before—prices spike on sentiment, then fade when reality sets in." Copper-intensive industries, from electronics to construction, are bracing for potential cost increases, though many expect the rally to unwind before significantly impacting input prices.

Outlook: A Two-Story Market

Looking ahead, BNP Paribas sees a clear divergence between the speculative rally and underlying fundamentals. The bank expects copper to peak in the second quarter as financial flows chase momentum, but forecasts a gradual decline in the second half of 2026 as oversupply re-emerges. Other analysts are split, with some citing structural demand from electrification and renewable energy as a longer-term support. For now, the market is watching for cues from Chinese import data and any resolution to geopolitical tensions.

"Without a deal on tariffs or a sustained recovery in Chinese demand, the speculative froth could evaporate quickly," the BNP analyst added. Attempts to reach the bank for further comment were unsuccessful.