Analysts boost 2027 copper estimates, but cautious about US stocks, AI demand

By Eric Onstad and Vedika Thorat

LONDON/BENGALURU, Oct 29 (Reuters) - Analysts marked up their copper forecasts for next year in a Reuters poll, although they were wary of an overhang of US inventories and the possibility that forecasts for surging AI demand may be overblown.

Copper prices have gained 15% so far this year, having touched a record high of $14,875 per metric ton in September, partly due to a large flow of inventories to the US on speculation the Trump administration may impose tariffs on the metal.

The price of copper, widely used in the power and construction sectors, has also been boosted by bullishness over expected huge demand from AI data centres.

The London Metal Exchange cash copper contract is expected to average $14,012 per ton in 2027, according to the median forecast of 25 analysts, up 7.3% from the forecast in the previous poll in July.

The forecast, however, is 3.8% lower than the current price.

"Demand narratives are stronger than demand realities in the copper market at the moment," said Carsten Menke of Julius Baer in Zurich.

"Broader-based electrification — including data centres, the power grid, electric vehicles and clean energy — is providing structural support to demand, but it has not unleashed a boom yet."

Analysts also lifted their estimates for a global surplus in 2026 by 12% from the July poll to 125,000 tons and nearly doubled their forecasts of an excess for next year to 92,000 tons from 50,000.

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ALUMINIUM MARKET TO SWING TO SURPLUS

Aluminium prices touched a four-year high in June after supply disruptions in the Gulf due to the US-Israeli war with Iran, but they have retreated since then, mainly due to a recovery of Middle Eastern supply.

Prices of aluminium, vital for transport, construction and packaging, are up 1.4% so far this year.

LME cash aluminium is forecast to average $3,001 per ton in 2027, down 2.4% from the previous forecast and weaker than the current price of $3,071.

"We expect prices to continue declining ... as Middle East-related supply disruptions fade, inventories rebuild and the market returns to projected surpluses," said Bart Melek, an analyst at TD Securities.

Analysts expect a global aluminium surplus of 410,000 tons next year, compared to a balanced market in the previous poll. They project a deficit of 720,000 tons in 2026.

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TOP PERFORMER ZINC

Zinc, which is mainly used for galvanising steel, has been the best performing LME base metal over the past six months and has shot up 24% so far this year as mine supply has declined amid a battle on the market between bulls and bears.

Analysts raised their forecasts for LME cash zinc prices next year by 11%, expecting them to average $3,487 a ton, even though that forecast is well below the current price of $3,980.

"A meaningful surplus is possible, but we expect it to be modest rather than large, limiting the downside for prices as inventories remain historically low," said Deborah Idowu, an analyst at LSEG.

Analysts have edged up their consensus forecast of a zinc surplus next year to 165,000 tons from 161,000 in the July poll.

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