The copper bull case got a fresh proponent today as Scotiabank’s Orest Wowkodaw is back with a market update barely a month after his last one, and the message is that things are tightening faster than expected. Three major supply blows — Grasberg cuts, Kamoa-Kakula downgrades, and Barrick parking the Reko Diq project — have forced a rewrite of the deficit math.
How material? Scotia now sees a 2026 deficit of 529kt and a 2027 deficit of 375kt, up from 350kt and 99kt previously. That’s 1.9% and 1.3% of demand. The medium term looks even uglier on the supply side, with the 2030 deficit ballooning to 1,010kt from 713kt.
Wowkodaw’s blunt take:
“Overall, the recently updated multi-year guidance downgrades to Grasberg and Kamoa-Kakula, combined with the deferral of Reko Diq, are material to the market and represent a very bullish development for the Cu price outlook.”
Copper is flat today at $6.03 but has weathered the growth risks from the Iran war surprisingly well and that’s a good sign.
The supply backdrop is so weak that demand growth of just 1.4% per year is now enough to balance the market through 2028, down from 1.75% previously, according to Scotia. That’s a low bar.
Scotia explicitly isn’t baking in two real risks. From the report:
“Although our analysis assumes no demand impacts from potential economic weakness associated with elevated oil/diesel/energy prices from the ongoing Middle East conflict, we also don’t account for potential supply risks to Cu cathode production (~15% of global mine output) due to sulphuric acid shortages and materially higher input costs.”
A large portion of sulphuric acid used in copper mines passed through the Strait of Hormuz. If the blockade continues, or restarts are slow, the deficit forecast might actually be conservative on the supply side. Cathode at risk is roughly 15% of global mine output.
Spot copper sits at $6.03/lb, and the equities are pricing in $6.21/lb on Scotia’s 8% NAV math — only a 4% premium. That sounds reasonable until you see the context:
“The current 4% premium to spot is well below the three-year average premium of 19% and the long-term (since 2018) average premium of 9%.”
Translation: copper miners are cheap relative to where the metal trades, especially when you stack the bullish supply revisions on top. In 2025, the average premium was 15%, with a 26% peak in January. Today’s 4% leaves room to run if Scotia’s deficit forecasts are right.
On individual names, FM is the top pick — penalized for Cobre Panama uncertainty but trading at an implied $5.32/lb, well below spot. CS, ERO, FCX, and LUN round out the recommended exposure list. IVN looks structurally undervalued too, helped by a Platreef contribution and despite Kamoa-Kakula disappointment
