Copper surrendered its year-to-date gains this week as escalating strikes between Iran and Israel rattled global energy markets and stoked fears of an economic slowdown, reversing one of the red metal’s most powerful bull runs in recent memory.
The London Metal Exchange’s three-month copper benchmark fell to around $12,955 per tonne — down roughly 3.6% from the $13,439/t level it held before the US-Israel campaign against Iran began on February 28. The retreat erases all of copper’s year-to-date gains, which peaked at 8% after the metal hit an intraday record of $14,527/t on the LME in late January.
“This is about concerns over the economy and inflation,” said Wu Kunjin, head of base metals research at Minmetals Futures. “The longer crude oil prices remain at high levels, the greater the impact on inflation.”
LME metals fell broadly after Israel struck Iran’s South Pars gas field — the world’s largest — and Iran retaliated against liquefied natural gas facilities across Qatar and the wider Gulf. Rising energy costs are pressuring industrial commodity demand and reinforcing a hawkish Federal Reserve, which held rates steady this week and signaled only one cut for 2026.
Copper gained over 40% in 2025 — its largest annual dollar increase in at least a decade — driven by mine disruptions and US tariff-driven stockpiling. The International Energy Agency reported that annual smelter treatment and refining charges settled at zero per tonne in January 2026, the lowest benchmark ever recorded, signaling that smelting capacity had significantly outpaced the supply of mined copper concentrate.
Supply disruptions at Indonesia’s Grasberg mine — where a September 2025 mudslide triggered a force majeure shutting 70% of output — and production downgrades at Chile’s Quebrada Blanca and Collahuasi compounded the tightness.
Meanwhile, COMEX warehouse stocks surged to over 503,000 tonnes in early 2026 as traders pre-positioned ahead of potential US tariff expansion on refined copper imports.
JP Morgan projects a global refined copper deficit of approximately 330,000 tonnes in 2026 and forecasts a full-year average of $12,075/t. Citi analysts expect the metal to rebound to $13,500–$14,000/t within three months once the conflict eases, but warn of a test toward $15,000/t if the Strait of Hormuz blockade persists through the end of March.
Long-term demand fundamentals remain intact, with BloombergNEF warning that copper may enter structural deficit as early as this year, driven by electrification, AI data center buildout, and a constrained pipeline of new mines.
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