The "Endgame" of De-globalization: A Historic Battle for Metals!

As freely circulating inventories continue to tighten, market pricing logic has shifted from demand-driven growth to a battle for scarce spot supplies, with Deutsche Bank issuing a warning: copper prices show significant upward momentum.

According to reports, Deutsche Bank analyst Daniel Ghali expects copper prices to rise to $22,050 per ton in Q2 2027, more than 50% above the London Metal Exchange (LME) price of $14,458.50 on Monday.

Ghali describes the current market as a "historic metal scramble," with buyers racing to secure an increasingly limited supply of spot cargoes.

In Ghali's view, the deglobalization trend is gradually disintegrating the unified supply pools formed during the era of globalization, splitting them into inventory systems controlled by individual countries. The acceleration of this process is widening the gap between reported inventories and real market-available supplies, making copper prices increasingly sensitive to any supply-side disruptions.

71% of Inventory May Be Locked, Liquidity Crisis Emerges

Deutsche Bank believes continued U.S. stockpiling is further altering the global distribution of copper inventories.

The bank estimates that stockpiling demand triggered by U.S. tariffs may result in 1.3 million tons of steel being stranded in warehouses by the end of the year.The research warns:

The combination of deglobalization and decades of underinvestment in supply has created vulnerabilities.

If the current trend continues, by the end of this year, copper inventories held by the U.S. and key Asian consumer markets combined could account for 71% of global supply, further squeezing available spot resources for other regions.

Even if the U.S. ultimately does not impose copper tariffs, the copper may not necessarily flow back to other markets. Due to the premium of U.S. copper futures prices over the LME, and LME having warehouses in the U.S., once copper enters the U.S. system, it could continue circulating between different warehouse locations within the U.S. even if the premium narrows, rather than re-entering the global market.

Analysts believe as countries emphasize supply chain security and aggressively stockpile critical raw materials, copper no longer flows as freely in global markets as it once did. The copper truly available to other buyers is increasingly scarce, ultimately evolving into a battle for spot cargoes.

Extreme Scenario: Freely Circulating Inventory Could Approach Zero

Ghali further warns that if the stockpiling trend continues, freely circulating inventories could approach zero by the end of 2028. He added that this would be an inflection point, which the market must prevent by suppressing demand or raising prices. 

Current copper prices are not high enough to trigger large scale demand substitution. Although aluminum enjoys a cost advantage and can substitute for copper in some situations, its lower conductivity means that large-scale substitution can only happen if copper prices rise much higher.

This means that, until prices rise high enough to change end user behavior, tight supply will continue to support copper prices.

Ghali also emphasizes that the current copper market is already struggling to absorb multiple pressures simultaneously, including ongoing U.S. stockpiling, further restocking demand, disruptions in refined copper supply, and unexpectedly tight global supply-demand balance. Once these factors resonate together, price increases could far exceed market expectations.

Deutsche Bank Expects 2027 Copper Price Average of $20,900

Deutsche Bank expects the average copper price to reach $20,900 per ton in 2027, peaking at $22,050 in Q2 2027; the 2028 average is expected to fall back to $18,500, reflecting expectations of a gradual return to market balance after an extremely tight period.

In the short term, copper prices still have significant room to reach this target. On Monday, LME copper prices fell 1.33% to $14,428.50 per ton.

The current price is still more than 50% below Deutsche Bank's 2027 target price, suggesting that moving from current prices towards an extreme shortage scenario is not a linear process; tariff policies, smelting capacity, and changes in actual demand will still determine whether this round of copper market tightness evolves into a true supply crisis.

"Owning Bottlenecks" Becomes Wall Street's Emerging Theme

The alert over copper supply is not an isolated signal, but part of a broader macro commodity bull market logic.

The “go long and fasten your seat belts” theory put forward by former Goldman Sachs global head of commodities Jeff Currie last August is receiving further market validation. Tightening physical markets, currency devaluation pressure, and policy interventions are resonating to create ongoing conditions for the repricing of scarce resources.

Last week, Stifel metals analysts also cited relevant data to corroborate the trend of tightening supply of key materials.

The "owning bottlenecks" investment theme—spanning refined oil products, rare earths, industrial metals, and some agricultural commodities—is gradually gaining recognition on Wall Street and is expected to develop into a consensus among a broader group of institutional investors.

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