With ongoing mine disruptions leading to tightening supply and robust long-term demand from electrification and clean-energy investment, UBS expects copper prices to climb next year, as quoted on Reuters. UBS revised its price outlook sharply, lifting its March 2026 forecast to $11,500 and setting a new 2026 year-end target of $13,000 per ton.
Additionally, supported by declining inventories and persistent supply risks, which are likely to maintain tight conditions, the bank also sharply revised its deficit forecasts, now expecting a 230,000-ton shortfall in 2025, up from 53,000 tons, and a 407,000-ton deficit in 2026, previously expected to be 87,000 tons.
According to the abovementioned Reuters article, UBS anticipates structural supply constraints to persist in 2026 as a result of disruptions across major producers, slower recovery in Chile and ongoing protests in Peru.
Dollar Drop Strengthens the Bull Case for Copper
Since most metals are priced in the greenback, a Fed rate cut typically supports metal prices by weakening the dollar. Per TradingView, the U.S. Dollar Index (DXY) has fallen 0.52% over the past five days and 8.19% year to date. The index has recorded an all-time decline of 16.89%.
A weaker dollar makes dollar-priced copper more attractive to global buyers, boosting demand and, in turn, supporting higher copper prices.
Fed Easing Sets the Stage for Copper Gains
Market expectations of interest rates falling further in December are key tailwinds for copper prices. According to the CME FedWatch Tool, there is an 85.1% likelihood of the Fed lowering the rate to 3.50-3.75% in December.
A further decline in interest rates is expected to ease pressure on manufacturers and construction firms, relieving their financial strain and supporting a boost in copper prices.
Energy Transition Also a Tailwind for Copper
Copper is crucial for sectors like energy and manufacturing electric vehicles, power grids and wind turbines. With increasing focus on clean energy and global economies working toward achieving net-zero emissions, demand forecasts for the red metal are improving.
UBS expects global copper demand to rise 2.8% in both 2025 and 2026, driven by electric vehicles, renewable energy expansion, power-grid investments and growing data-center activity, per Reuters.
ETFs to Consider
UBS noted that any near-term price softness is likely to be short-lived and recommended maintaining long copper positions. Below, we have highlighted funds offering exposure to the red metal.
Global X Copper Miners ETF COPX has gained 20.86% over the past month and 33.56% over the past three months. CPOX has added 56.27% year to date.
United States Copper Index Fund CPER has gained 6.18% over the past month and 18.60% year to date. However, CPER has fallen 4.89% over the past three months.
iShares Copper and Metals Mining ETF( ICOP has gained 16.55% over the past month and 26% over the past three months. ICOP has gained 48.63% year to date.
Sprott Copper Miners ETF COPP has gained 15.75% over the past month and 22.6% over the past three months. COPP has gained 37.31% year to date.
Themes Copper Miners ETF COPA has gained 18.16% over the past month and 35.92% over the past three months. COPA has gained 64.26% year to date.
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Global X Copper Miners ETF (COPX): ETF Research Reports iShares Copper and Metals Mining ETF (ICOP): ETF Research Reports Sprott Copper Miners ETF (COPP): ETF Research Reports Themes Copper Miners ETF (COPA): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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