The rally in copper prices to an all-time high has its roots in rising supply concerns, particularly following the announcement by a group of Chinese smelters that they intend to cut output by 10% in 2026. We suspect that if China's refined output does fall, it will be more modest than that, but it would still tighten the supply backdrop. While this does justify higher prices, we think that much of the bad news is priced in, and that in the absence of further supply shocks, that prices will ease back from these all-time highs.
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