Copper prices are likely to remain strong over the next two years as global supply tightens and the U.S. dollar weakens, according to a new report from Morgan Stanley.
In a note to investors on Wednesday, the bank said that supply disruptions at several major copper mines, combined with a softer dollar, are helping drive prices higher. Because of this, Morgan Stanley raised its price outlook and upgraded two mining stocks, Southern Copper and Penoles, to an Equal Weight rating.
The bank pointed to production issues earlier this year at key sites including Ivanhoe’s Kamoa-Kakula in the Congo, Codelco’s El Teniente in Chile, and Freeport-McMoRan’s Grasberg Block Cave in Indonesia. These disruptions are expected to keep global supply tight, limiting how much new copper can reach the market.
Morgan Stanley now expects copper prices to average about $4.83 per pound in 2026, close to current levels of $4.85 but well above this year’s average of $4.34. The firm also believes that, given few strong alternatives for copper exposure, Southern Copper is no longer likely to underperform. It set a mid-2026 price target of $132 per share and noted potential upside for dividends, as controlling shareholders may seek extra cash for mergers and acquisitions.
Penoles was also upgraded after analysts observed that the stock is once again trading at a discount to its sum-of-parts valuation, even though it has performed well so far this year. Morgan Stanley said the current discount is much larger than its historical average, suggesting room for recovery.
Overall, the bank’s commodities team remains positive on copper, expecting both macroeconomic and market-level factors to support prices. They forecast a significant supply deficit by 2026 as production issues persist and demand for the metal continues to grow.
However, Morgan Stanley cautioned that a slowdown in global growth, especially if U.S. tariffs weigh on trade, could pose downside risks. On the other hand, stronger stimulus measures from China or further interest rate cuts could push copper prices even higher.
