The Union Bank of Switzerland (UBS) is expecting heightened copper prices next year. Disruptions at major mining operations combined with rising demand in the clean energy sector have been serving as catalysts for the anticipated rally, the financial firm said in a note on Friday.
By March, the banking house foresees the price of the commodity rising by US$750 per metric ton to US$11,500 per ton. In the longer term, UBS says it will reach US$13,000 per ton by the end of next year.
The paid proprietary client report viewed by Reuters also details how the bank expects the supply deficit to increase considerably. UBS raised its deficit forecast by 53,000 tons to 230,000 tons and expects it to climb up to 407,000 tons throughout 2026. Shrinking inventories and prevalent supply risks linked to issues in the mining industry are largely responsible.
“Miners are struggling to keep copper supply up given the accelerating industry trends of declining exploration, older mines, increasing depths, lower grades, longer development timeframes, higher capex and higher operating costs,” UBS stated in another recent report.
UBS highlighted how slower output recovery in Chile, the world’s top producer of the metal, is a driving force behind its predictions. The nation’s major state-owned producer Codelco had its worst month for copper output in decades this July. A major accident caused by seismic activity at its flagship mine causing six fatalities and nine injuries. The operation was shut down for over a week as a result.
UBS also cited production problems at the Grasberg mine in Indonesia, held by Freeport-McMoRan Inc (NYSE: FCX), and frequent protests in Peru. These protests have caused significant disruptions at major Peruvian mines due to road blockades, transport disruptions and other factors. They are estimated to have shaved up to 30,000 tons off of Peru’s production total this year.
Freeport’s Indonesian subsidiary it runs in partnership with the government was forced to declare force majeure and shut the Grasberg operation down after seven workers were killed in a mud slide incident in September. This tragic occurrence is expected to result in the loss of 600,000 tonnes of copper that would have otherwise been produced between 2025 to 2026. PT Freeport Indonesia said last week that production is expected to resume by July.
Grasberg is the world’s second largest copper mining operation behind the Escondida mine in Chile. BHP Group Ltd (NYSE: BHP) (LON: BHP), Rio Tinto Group (NYSE: RIO) (FRA: CRA1) and a consortium of Japanese investors own this mammoth Chilean project.
UBS explained in the note that it projects copper demand to increase by 2.8 per cent next year. An increasing number of data centres, electric vehicles, clean tech and power-grid investments will be the driving force, the bank explained.
In another research report from Wood Mackenzie on Nov. 20, the firm predicted that global copper demand will surge by 24 per cent by 2035.
Aside from Freeport, UBS has selected Antofagasta plc (OTCMKTS: ANFGF) (FRA: FG1), Anglo American plc (OTCMKTS: AAUKF)(LON: AAL) and Australia’s Sandfire Resources Ltd (ASX: SFR) as its top copper mining industry stock picks.
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