Copper's squeeze will end by government decision, and the COMEX-LME spread will say when
Deutsche Bank's Daniel Ghali sees copper at $10 a pound, $22,050 a tonne, by the second quarter of 2027 as US and Chinese stockpiling leaves the two holding 71% of world supply. The desk reads it as a liquidity crisis that ends when Washington or Beijing decides to release metal, not when a mine finds more.
Daniel Ghali's first big call as Deutsche Bank's new head of metals research rests on 71%. He argues, in a call first carried by the Wall Street Journal, that if current trends hold, the United States and China could be sitting on 71% of the world's available copper supply by year-end, a concentration that leaves everyone else bidding for what's left. The price target, $22,050 a tonne by the second quarter of 2027, is almost 50% above Monday's level. The stockpile figure supplies the argument behind the target.
The stockpile figure makes this a liquidity forecast rather than a demand forecast. A demand boom would require more data centres wired, more grids rebuilt and more EVs rolling off lines. A liquidity crisis only requires existing metal to stop moving. Ghali's framing matters more than whether copper reaches $9.80 or $10.20.
The mechanism pushes the price higher as available metal shrinks. When refined copper sits in a Chinese strategic reserve built up over decades or in COMEX-linked warehouses filled by traders positioning ahead of a threatened US tariff on refined cathode, it is off the market by construction. It is not for sale at today's price, or arguably any price, because the holding is strategic rather than commercial. The remaining copper has to meet the world's wiring demand. The clearing price is whatever finally makes an electrical engineer specify aluminium busbar instead of copper. The industry's rough rule of thumb is that engineers start swapping conductor material in earnest once copper trades near four times the price of aluminium. That ratio sets the ceiling on Ghali's call more directly than a mine-supply chart.
A copper tariff threat has moved the physical market before. Washington opened a national-security investigation into copper imports last year, then taxed semi-finished copper products while carving out an exemption for refined cathode. The decision promptly crushed the premium traders had been paying to hold metal in the US. The refined-cathode question was deferred, and that unresolved threat keeps the arbitrage alive: importers who do not know whether refined copper is next have an incentive to bring cathode into US warehouses now, tariff or no tariff. Ghali's stockpile is being built from that uncertainty as well as from tariffs already in force.
Markets have been cornered by copper before. In 1996, Sumitomo's Yasuo Hamanaka had spent years controlling a large share of LME copper stocks; when the position unwound, prices collapsed within weeks and Sumitomo booked roughly $2.6 billion in losses. That squeeze broke when a single trader's book met a margin call. Nation-states do not face margin calls. Beijing's reserve has been built for decades with no commercial deadline, and the metal piling up in American warehouses hedges tariff policy that only Washington can make redundant. The 1996 squeeze ended through a forced unwind. This one ends when a government decides to release metal or changes the policy driving the hoarding.
For anyone specifying copper in volume, the supply constraint is the important point. Data-centre builders need copper for power distribution and busbar at a scale that barely existed five years ago. Grid operators are rebuilding transmission and distribution networks designed for a smaller, slower-growing load. EV makers need it in wiring harnesses and motor windings. Defence programs need it in applications where aluminium substitution is not always an option. These buyers are competing for a shrinking float of freely available metal against Chinese reserve managers and tariff-hedging importers, neither of whom is as price-sensitive as a normal commercial buyer.
The spread between COMEX and LME copper matters more than the front-month price. The arbitrage Ghali describes pulls metal into American warehouses in anticipation of a tariff that threatens refined cathode without applying it. A widening spread says hoarding is accelerating even on a day the outright price falls. A spread that collapses toward zero says Washington has given importers enough clarity to stop pre-positioning metal and the float is returning. Other price moves carry less information.
Monday's tape points the other way at first glance. COMEX copper traded around $6.62 a pound by midday, down 2.1%, which resembles the demand destruction the bears have been waiting for. A single down day during a broader risk-off session, with oil spiking, yields pushing through 5% and Asian equities selling off, says more about positioning than physical availability. By Ghali's math, demand destruction does not appear until copper is nearly 50% above Monday's price, when aluminium substitution begins to make sense for an engineer considering a multi-year design change. A 2% pullback after a record run offers little evidence about the physical market.
The desk's read is that Ghali has the target roughly right because two governments are choosing not to sell. The trade will end with a policy decision, not a mine-supply chart. Washington's decision on refined cathode before Ghali's second-quarter deadline should appear first as a narrowing COMEX-LME spread, weeks before it reaches the outright price. Until that decision arrives, or Beijing decides its reserve is full, wiring-intensive buyers should plan on paying the premium.