Deutsche Bank warns: Severe supply disruptions and major industry consolidation may cause the copper market deficit to persist next year.

Deutsche Bank’s analysis clearly points out that the global copper market is facing a supply squeeze. Amid accelerating industry consolidation, severe supply disruptions have pushed copper prices close to historic highs.

According to Chasing Wind Trading Desk, on November 30, Deutsche Bank’s report indicated that due to severe supply disruptions and accelerated industry consolidation, mine supply will decline in 2025 and only rebound by about 1% the following year, putting the market in a “clear deficit state.”

Impact on Investors: This judgement directly led Deutsche Bank to raise its 2026 copper price forecast to $10,600/ton, and expects the peak to exceed $11,000/ton in the first half of 2026. The copper market has entered a new stage dominated by incentive pricing. Investors should closely watch the upcoming “Capital Markets Day” (CMD) events hosted by major mining giants, especially Glencore, whose M&A moves and up to 10% expected free cash flow yield (2026E) make it a market focus.Key Company Dynamics: Glencore will host its first CMD in two years, aiming to restore market confidence in its operational capabilities; Rio Tinto will focus on simplifying its business and capital discipline. Additionally, Deutsche Bank has listed Anglo Teck, Glencore (GLEN), and Freeport (FCX) as top picks.

On December 1, the London copper price was reported at $11,279/ton, setting a new historical high.

Copper Market Outlook: Supply Shortage Is Inevitable

Although the report also flagged risks, such as concerns over an “AI bubble,” Deutsche Bank believes that unless there is a severe global economic slowdown, the incentive pricing mechanism for copper will persist. The long-term drivers behind this are:

Electrification and Digitization Trends: In 2024, global electricity demand growth has surpassed GDP growth and is expected to continue expanding at a healthy pace.Slow Approval of New Projects: The approval speed of new copper mining projects may remain below the level needed to meet future demand.

Based on the above analysis, Deutsche Bank has listed Anglo Teck, Glencore (GLEN), and Freeport (FCX) as top picks in the sector. Meanwhile, it has adjusted its preferences in base metals companies, upgrading Boliden (BOL) to “Buy” and downgrading First Quantum (FM) to “Hold.”

Glencore (GLEN) Capital Markets Day: Return of the King or Something Else?

Glencore will hold its first Capital Markets Day (CMD) since 2022 on December 3, which is attracting significant market attention. After years of weak production, Glencore hopes to restore investor confidence in its operational capabilities and showcase growth options for its copper business through this event.

Deutsche Bank believes that if Glencore at this event only downgrades its 2026 production guidance for the copper business (as the market already expects), while maintaining recovery targets for 2027/28 and keeping its industrial capex guidance (excluding unapproved large projects) within the $6-7 billion range, this update could be positively received by the market.

However, the “elephant in the room” during the event will be the M&A topic. Glencore has actively sought large-scale deals in the past, and Deutsche Bank believes management remains open to spinning off certain segments (such as coal) for a “suitable deal.” The report also mentions recent news of Glencore negotiating the sale of its Kazzinc business. In terms of valuation, Glencore’s spot free cash flow yield forecast for 2026 is as high as 10%, ranking first among major miners and is highly attractive.

Rio Tinto (RIO) and Other Miners: Focus on Capital Discipline and Asset Divestitures

Rio Tinto will hold its Capital Markets Day on December 4, with the market expecting a focus on business simplification, capital discipline, and divestment of non-core assets. Deutsche Bank expects Rio Tinto to reaffirm its group capex guidance of $10-11 billion per year (possibly lowering it below $10 billion in the medium term), introduce cost targets, and update its plan to sell several smaller divisions, including borates and titanium-iron operations.

In addition, Rio Tinto will provide its 2026 production guidance for the first time, with close market attention on the Simandou project because of concerns it could cause supply surplus next year. Overall, Deutsche Bank expects Rio Tinto’s group strategy to remain largely unchanged.

This week, several miners will also hold activities, including Vale’s CMD on December 2 and Boliden’s project and capex update on December 5. In addition, the Anglo Teck merger vote will be held on December 9.

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