Base metals, particularly copper and aluminum, have surged in early 2026, driven primarily by intensifying global supply concerns. Copper, trading nearly $2,000 higher than its May 2024 peak, is being buoyed by fears of new US tariffs and persistent raw material shortages. This has led to visible stockpiling, with rising inventories on the COMEX. "There are now apparent fears that the tariffs will be extended to refined copper after all, which is why US companies seem to be rebuilding or further expanding their copper stocks," said Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG.
Despite a strong 40% gain over the past 12 months, with prices recently trading in the $5.90 zone, the near-term outlook is mixed. Commerzbank Research sees "some potential for a setback in the copper price in the coming weeks." Nguyen points to uncertainty over the timing of US tariff extensions and high short-term production in China, the world's top producer, as limiting factors. "Only later in the year, when it becomes apparent that Chinese copper production is reaching a plateau... do we expect sustained gains," she added, projecting stabilization around $14,000 per ton.
High-profile investor Chamath Palihapitiya has labeled copper his top trade idea for 2026, arguing the market is "completely underestimating" global supply shortages against rising demand from data centers, EVs, power grids, and defense systems. "The asset that is set up to go absolutely parabolic is copper," he stated, emphasizing its role as a critical conductive material.
Aluminum follows a similar narrative, with production in China having peaked and London Metal Exchange inventories falling since November, indicating a supply shortage. Commerzbank considers the price increase sustainable but sees limited further upside, projecting $3,300 per ton by year-end. A key cap on prices for both metals is the expected supply response from producers outside China, stimulated by higher prices and improved profitability from lower energy and raw material costs.
