Morgan Stanley expects copper prices to remain strong well into 2026, supported by persistent supply disruptions and a softening U.S. dollar that are tightening global market conditions.
In a note to investors on Wednesday, the bank said that “a weakening dollar and supply disruptions at major copper producers are pushing metal prices higher,” leading analysts to raise price forecasts and upgrade Southern Copper and Penoles to Equal Weight.
Morgan Stanley highlighted a series of setbacks at key global mines, citing “incidents earlier this year at Ivanhoe’s Kamoa-Kakula, Codelco’s El Teniente, and most recently Freeport’s Grasberg Block Cave,” which are expected to limit near-term production and keep supply constrained.
The bank’s commodities team now projects “2026e prices of $4.83/lb roughly in-line with spot prices of $4.85/lb, but well above the YTD average of $4.34/lb.”
Given the tight supply environment and few available investment alternatives, Morgan Stanley said it “no longer expect[s] SCCO to underperform,” adding that shares are “trading at an elevated premium multiple to their historical average.” The analysts also raised their mid-2026 price target to $132 per share, noting there may be “upside to our dividend estimates given controlling shareholders’ cash needs for potential M&A.”
Penoles was similarly upgraded to Equal Weight, as it is “once again trading at a discount to its SoP,” even after a strong year-to-date rally. The firm pointed out that the stock’s “current SoP discount is well below the historical average.”
Overall, Morgan Stanley said its commodities team remains “constructive on copper as they see macro and micro support, with material supply disruptions pushing the market into a large deficit in 2026.”
The bank cautioned, however, that potential headwinds could arise from “a deceleration in global growth resulting from U.S. tariffs,” while Chinese stimulus measures or lower interest rates could offer additional upside to prices.
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