Copper Price Forecast – Strong Structural Demand Supports Higher Prices After Consolidation

Author: Muhammad Umair

Published: February 22, 2026

Key Points

• Copper prices surged in 2025 due to strong long-term demand driven by electrification, AI infrastructure, and global power grid expansion.
• Near-term volatility is expected due to rising inventories and softer demand from China.
• The long-term outlook for copper remains positive, supported by loose financial conditions, persistent inflation, and a weaker US dollar.

Market Overview

Copper prices have seen a significant increase, surpassing $6 USD/Lbs, reflecting robust long-term demand expectations. The surge is primarily attributed to trends in electrification, power grid expansion, and increased electricity consumption associated with AI technologies. However, the market is currently at a fragile stage, with rising inventories and reduced seasonal demand potentially leading to short-term price volatility.

Macro Drivers and Short-Term Risks

The recent price increase is supported by strong structural demand, but short-term factors such as increased inventories and softer demand from China pose risks. Visible stocks at exchange hubs in the U.S. and China have risen, indicating ample supply. Additionally, the Lunar New Year has led to decreased physical buying interest in China, contributing to a less robust price discovery process.

Speculative Positioning and Market Dynamics

Speculative positioning has significantly influenced copper prices, with record-high open interest on the Shanghai Futures Exchange indicating that retail and momentum-driven flows have pushed prices higher. However, crowded positioning can lead to sharp corrections, as seen recently when long positions were unwound.

Macro Economic Environment

The macroeconomic landscape is mixed, with U.S. GDP growth slowing and consumer sentiment at multi-decade lows, suggesting cautious spending. Despite this, loose financial conditions and rising inflation are expected to sustain investment flows into commodities, limiting deeper corrections in copper prices.

Technical Outlook

Copper prices have reached a target of $6.30, but are currently correcting lower. The overall trend remains bullish, with potential for a strong surge if prices break above the $5.80 resistance level. Key support levels are identified at $5.20, with deeper corrections potentially leading to a rebound towards $7.

Cross-Market Signals

The relationship between copper and the U.S. dollar is inverse; a weaker dollar typically supports higher copper prices. Additionally, the copper-to-gold ratio indicates a transition from safe-haven assets to growth-oriented investments, suggesting that as economic conditions improve, copper may lead the market.

Conclusion

While copper is poised for long-term growth driven by electrification and infrastructure demands, short-term volatility is anticipated due to rising inventories and softer demand. Corrections to the $5.20 level are viewed as buying opportunities for long-term investors, with a confirmed breakout above $5.80 indicating renewed upside momentum.

About the Author

Muhammad Umair is a finance MBA and engineering PhD, specializing in currencies and precious metals. He leads a team providing advanced market analytics and trading strategies.