UBS(US:UBS) Di Yi Cai Jing·2025-11-29 00:49Core Viewpoint - The copper market is experiencing significant price increases due to supply shortages and geopolitical factors, particularly U.S. tariffs, which are impacting pricing dynamics and supply chains [1][4][5]. Group 1: Market Dynamics - LME copper futures surged over 4%, reaching a historical high of over $11,200, driven by Fed rate cut expectations and supply shortages [1]. - Mining companies are exerting pricing power, with reports indicating that miners are demanding record low processing fees from smelters, reflecting a tight supply chain [3][4]. - Codelco's pricing for the U.S. market has reached a premium of over $500 per ton, indicating heightened supply chain costs and demand concerns [4][5]. Group 2: Supply Chain Concerns - The copper supply chain is in a historically tight phase, exacerbated by mining accidents in Indonesia and Chile, leading to increased demand forecasts [3]. - The U.S. is expected to absorb a significant portion of global copper supplies, potentially holding 90% of global copper inventories by early next year, which could create shortages in other markets [5]. Group 3: Price Forecasts - UBS has raised its copper price forecasts for 2026, predicting prices to reach $11,500 per ton by March and $13,000 by December, driven by ongoing supply risks and declining inventories [6][7]. - The copper market is expected to face a significant supply gap, with UBS projecting a shortfall of 230,000 tons in 2025 and 407,000 tons in 2026, a substantial increase from previous estimates [7]. - Long-term forecasts from Goldman Sachs suggest copper prices could reach $15,000 per ton by 2035 due to resource constraints and increasing demand in key sectors [8].