UBS Forecasts 520,000-Ton Copper Deficit, Recommends Long Positions

Analysts at UBS are maintaining a favorable outlook on copper, citing a projected supply deficit that is expected to support prices despite recent market volatility. The firm recommends that investors consider long exposure to the industrial metal, particularly on price dips, based on its fundamental analysis.

Significant Deficit Expected

UBS forecasts that the global copper market will face a deficit of 520,000 metric tons in 2026. The investment bank stated that this underlying supply and demand imbalance remains unchanged, even with what it calls "near-term headwinds."

Based on this projection, UBS advises clients to maintain long positions in copper. As an alternative strategy to generate returns, the firm also suggested selling copper price downside risks to enhance yield.

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Near-Term Market Dynamics

Recent price action has seen London Metal Exchange (LME) copper surrender some gains, though it continues to hold above $13,000 per metric ton. According to UBS, ongoing uncertainty surrounding potential U.S. tariffs is influencing inventory dynamics.

This uncertainty is reportedly pulling copper material into the U.S. COMEX market, which affects inventory levels in other parts of the world. Investors are also closely watching for a decision on the Cobre Panama mine, which is expected later this year, as another key market catalyst.