The copper bull case obtained a contemporary proponent at present as Scotiabank’s Orest Wowkodaw is again with a market replace barely a month after his final one, and the message is that issues are tightening quicker than anticipated. Three main provide blows — Grasberg cuts, Kamoa-Kakula downgrades, and Barrick parking the Reko Diq venture — have pressured a rewrite of the deficit math.
How materials? Scotia now sees a 2026 deficit of 529kt and a 2027 deficit of 375kt, up from 350kt and 99kt beforehand. That is 1.9% and 1.3% of demand. The medium time period seems even uglier on the availability aspect, with the 2030 deficit ballooning to 1,010kt from 713kt.
Wowkodaw’s blunt take:
“General, the lately up to date multi-year steering downgrades to Grasberg and Kamoa-Kakula, mixed with the deferral of Reko Diq, are materials to the market and signify a really bullish improvement for the Cu worth outlook.”
Copper is flat at present at $6.03 however has weathered the expansion dangers from the Iran battle surprisingly properly and that is a great signal.
The provision backdrop is so weak that demand progress of simply 1.4% per 12 months is now sufficient to steadiness the market via 2028, down from 1.75% beforehand, in keeping with Scotia. That is a low bar.
Scotia explicitly is not baking in two actual dangers. From the report:
“Though our evaluation assumes no demand impacts from potential financial weak spot related to elevated oil/diesel/vitality costs from the continuing Center East battle, we additionally do not account for potential provide dangers to Cu cathode manufacturing (~15% of world mine output) because of sulphuric acid shortages and materially greater enter prices.”
A big portion of sulphuric acid utilized in copper mines handed via the Strait of Hormuz. If the blockade continues, or restarts are gradual, the deficit forecast may truly be conservative on the availability aspect. Cathode in danger is roughly 15% of world mine output.
Spot copper sits at $6.03/lb, and the equities are pricing in $6.21/lb on Scotia’s 8% NAV math — solely a 4% premium. That sounds affordable till you see the context:
“The present 4% premium to identify is properly under the three-year common premium of 19% and the long-term (since 2018) common premium of 9%.”
Translation: copper miners are low cost relative to the place the steel trades, particularly while you stack the bullish provide revisions on prime. In 2025, the typical premium was 15%, with a 26% peak in January. At the moment’s 4% leaves room to run if Scotia’s deficit forecasts are proper.
On particular person names, FM is the highest decide — penalized for Cobre Panama uncertainty however buying and selling at an implied $5.32/lb, properly under spot. CS, ERO, FCX, and LUN spherical out the really useful publicity checklist. IVN seems structurally undervalued too, helped by a Platreef contribution and regardless of Kamoa-Kakula disappointment.
Goal costs for the SO-rated names: FM C$47 (31% upside), CS C$15.50 (34%), ERO C$50 (34%), FCX US$67 (11%), LUN C$36 (-3% — already ran previous goal after February’s pop to $44).
Q1 reporting season in Might is the following checkpoint nevertheless it’s wanting just like the multi-year copper deficits I have been writing about for years aren’t a forecast anymore, they’re the bottom case.
