Deutsche Bank warns of copper crunch, sees $10/lb needed

Deutsche Bank has issued a notably aggressive forecast on copper, suggesting the market is shifting from a conventional supply-demand narrative toward something resembling an inventory or liquidity squeeze.

Their price projection stands out: $22,050 per tonne, or roughly $10/lb, by Q2 2027, which is nearly 50% above where prices currently sit.

"We expect copper to face acute scarcity over the coming months as unencumbered inventories shrink to critical levels," DB writes. "Demand destruction appears to be the most likely rebalancing mechanism, requiring prices to reach a level at which demand is destroyed sufficiently quickly."

The bank contends that reported copper inventories significantly exaggerate the amount of metal genuinely accessible to the global market.

China has built up an estimated 2.05 million tonnes in strategic reserves, while US stockpiles have grown sharply as the ongoing threat of tariffs has made it economically attractive to move copper into the US. Deutsche Bank calculates that the US could have effectively locked away 1.3 million tonnes by the end of the year.

Combining those figures, they estimate that 71% of global above-ground copper inventories will be "encumbered" by the end of 2026. Their gauge of truly free-floating inventories is already at its lowest level since records began in 1984.

That is the core of their argument.

On the curve, a shortage typically shows up as backwardation — where nearby prices climb relative to later contracts. A look at the current US curve illustrates this:

Deutsche Bank believes the backwardation mechanism is losing its effectiveness. Tariff worries in the US have kept CME copper expensive relative to LME, drawing metal into the US. But once there, the reverse trade is far harder, as copper can enter the US much more easily than it can leave.

That matters because it means a severe shortage outside the US might not trigger the kind of LME backwardation traders usually anticipate. Deutsche Bank argues the adjustment could instead come through the outright copper price.

Inventories:

On prices, they predict a climb to $20,900 per tonne next year and $18,500 in 2028, up from $14,500 currently.

They point out that standard inventory metrics are rising, but that trend has collided with stockpiling efforts, which may be intensifying. They note that in February 2026, the China Nonferrous Metals Industry Association called for expanding strategic copper reserves. In the US, the private sector is largely driving the accumulation due to Trump's tariff threats. They argue that metal will not flow back into global markets because the threat is unlikely to disappear soon. In June 2025, the Secretary of Commerce recommended a phased universal tariff on refined copper of 15% starting in 2027 and 30% starting in 2028. Some speculation suggests Trump could rescind it, but market behavior does not reflect that.

Overall, they foresee a substantial rally from current levels, a theme that has been discussed for years.