Copper tops $5 per lb as 2026 talks, policy risk harden

Copper traded around $5 per lb. ($11,000 per tonne) on Friday as industry participants warned that 2026 contract negotiations could be the toughest in years, with policy uncertainty in the United States emerging as a key risk.

Panelists on a Fastmarkets webinar last week said the usual single benchmark for treatment and refining charges (TC/RCs) may give way to more regionalized benchmarks next year, reflecting sharp divergences between spot and legacy contracts in Asia and elsewhere. Analysts noted that TC/RCs have sunk deep into negative territory, highlighting how aggressively traders and some smelters are bidding for concentrates.

“I think this is probably the year we see the most interest around what’s happening in the benchmark,” Chilean state miner Codelco principal analyst Scott Crooks said during the Nov. 19 webinar. “It’s very uncertain where we go with such a big gap between last year’s benchmark and current spot.”

Smelter stress won’t be uniform. Rising by-product credits – notably sulphuric acid and gold – and firmer cathode premiums are cushioning some plants, while newer smelters without long-term supply ties face the brunt of the squeeze. The panel’s consensus was that the structural fix sits upstream: mine growth, not smelter curtailments, is needed to rebalance an increasingly tight market tied to electrification demand.

Rising premia

On the refined side, Codelco has been lifting 2026 cathode premiums outside the U.S. BMO Capital Markets, citing Fastmarkets, told clients Friday that the Chilean producer recently offered metal at premia of $330 per tonne to Taiwan and $335 per tonne to Southeast Asia, after similar moves to China, Korea and Europe – evidence that buyers are paying up even beyond the pull of COMEX deliverability in the U.S. market.

Prices were underpinned by ongoing mine-side hiccups and tight nearby supply. The LME three-month contract hovered near $4.94 per lb. ($10,900 per tonne) in Friday afternoon dealing. Traders are positioning for deeper deficits, with Fastmarkets highlighting a widening gap between trader and smelter terms as new entrants compete to build market share.

Webinar participants expect copper prices next year to hover around $4.54 – $5 per lb. ($10,000–$11,000 per tonne). Several pointed to U.S. tariff policy as the single largest swing factor, given reviews under way that could reshape trade flows and keep the COMEX/LME spread volatile into next year.

“Capital spending inflation is pushing majors to buy rather than build, tightening supply into 2026,” London-based SP Angel mining analyst John Meyer said in a Friday note.

Market flux

For context, last year’s headline annual deal – Antofagasta (LSE: ANTO) selling concentrate to China-based Jiangxi Copper – cleared at $21.25 per tonne and 2.125¢ per lb. for 2025. By late November this year, Fastmarkets’ implied assessments in Asia showed deeply negative TCs for both smelter and trader purchases, underlining how far the market has swung, analysts pointed out.

Market watchers are monitoring final 2026 TC/RC settlements versus 2025 levels; the pace at which Asian buyers accept higher Codelco premia; producer guidance on 2026 volumes; and any U.S. policy moves that could widen or narrow regional price and premium spreads.

Copper rose to a record in July after U.S. President Donald Trump announced plans to implement a 50% tariff on the industrial metal.

Bank of America (BofA) in September raised its copper price forecasts, pointing to widespread mine disruptions and steady demand as the metal tightens across global markets. The bank now expects copper to average $11,313 per tonne in 2026, an 11% upgrade from its prior estimate, and $13,501 in 2027, up 12.5%. Strategists forecast a peak of $15,000 per tonne ($6.80 per pound).

Most recently, the U.S. added copper, silver and uranium to an expanded list of critical minerals that it deems are vital to America’s economy and national security.