Natalie Scott Gray and Charles Plum of StoneX dissect copper's rally above $14,000/ton, arguing prices have overshot fundamentals. They see the move as speculator- and tariff-fear-driven — not justified by the ~300kt surplus, record exchange stocks, or AI's tiny (sub-2%) share of demand. Plum expects a drift back toward $12,500 as longs liquidate, while both agree the June 30 Section 232 tariff deadline is the dominant near-term swing factor. The Iran war's demand-destruction risk and the absence of Fed rate cuts further undermine the bull case, though structural grid/EV demand keeps the long-term story intact.
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Natalie Scott Gray, Senior Metals Analyst at StoneX, is joined by Charles Plum, Head of Base Metal Trading, to address the key questions that surfaced at Copper Week in New York. The discussion centers on whether copper's record ~$14,000/ton settlement price is justified — and both speakers conclude it is not. **The Bear Case: Fundamentals vs. Price** Gray lays out the core challenge: copper posted a 600,000-ton surplus last year and is still expected to run a ~300,000-ton surplus this year. Global exchange stocks across LME, SHFE, and Comex hit all-time highs by end-Q1. Mine production is forecast to ramp up, bringing the concentrate market toward balance by 2028. …
Tactically bearish copper: momentum is broken, funds are profit-taking, and the June 30 Section 232 deadline is likely a non-event (no announcement), which removes a key prop. Long liquidation toward $12,500 is the base case, with a floor in the low-$12,000s.
Cautious/bearish over the next several months: no US rate cuts (potentially hikes) delay cyclical demand recovery; Iran war resolution is uncertain and demand-destruction risk is underpriced. If Section 232 tariffs eventually materialize, it's a bullish shock — but timing is unknowable and both speakers lean toward no near-term action.
Structurally bullish: grid/EV/infrastructure demand is real and growing; copper's role in electrification is secular. However, AI-specific demand is overhyped (<2% of total), and mine supply is expected to come toward balance by 2028. The long-term bull case is intact but the AI narrative inflates it beyond what near-term fundamentals support.
Copper prices above $14,000 per ton are not fully justified by fundamentals, supply/demand balances, or macro conditions.
Natalie cites a 600,000 ton surplus last year, record-high global stocks at end of Q1, strong US dollar, no rate cuts, weakened Chinese economic data, and geopolitical tensions.
AI-related demand is less than 2% of total copper demand and the capex associated with AI will likely have to be downgraded due to grid connectivity, energy security, labor, and equipment hurdles.
Natalie states that AI is a very small portion of copper demand; real demand growth comes from grids, EVs, renewables, and power infrastructure; capex for AI data centers faces multiple bottlenecks.
If the Iran war does not end within the 60-day negotiation period, the demand destruction and impact on global economic growth will be far greater for copper than markets are expecting.
Natalie notes that markets never fully priced in the war, energy disruptions mean 11 million barrels/day of oil not coming out, and optimism about peace kept risk premiums low.
Are copper prices justified at record highs above $14,000 per ton?
Natalie argues they are not fully justified: there was a 600,000 ton surplus last year, global stocks hit all-time highs, no clear global speculative trend, and macro headwinds like a strong dollar, no rate cuts, and geopolitical tensions. She attributes the rally to supply concerns from the Iran war, section 232 tariffs, and a dangerous link between copper and AI driving fund flows. Charles agrees, noting copper historically overruns its news stories, the swift move was too fast, and we are already seeing profit-taking and a drift lower to around 13,200.
What realistically would the floor be for copper prices if the noise came out of the market?
Charles says he looks to where buying comes in; Far East clients have been trading the range 135 to 14K. Now that price has dropped below that, a floor should be around 12.5, with some long liquidation pushing it into the twelves if it stays below 13,500.
If section 232 tariffs on refined copper imports come in as outlined at 15%, what would you expect in the market?
Charles expects the CME to blow out and the ARB to go to $1,500 pretty quickly, noting that last year the ARB collapsed from 3,000 to virtually flat in 2 hours, so it moves fast on these announcements.
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