Copper, Aluminum and Steel Prices Face Supply, Trade and Geopolitical Risks in 2026

Copper, aluminum and steel remain highly sensitive to geopolitical tensions, industrial demand and shifts in government policy. Copper reached a record $14,527 per metric ton around the middle of the year, aluminum is expected to face a 1.7 million metric ton primary-market deficit in 2026, and steel prices continue to vary sharply across regions as trade protections and supply disruptions shape the market.

Industrial metal prices, including copper, steel and aluminum, remain highly sensitive to new signals surrounding geopolitical tensions, industrial demand and shifts in government policy. Here are the key developments to watch and the outlook for prices over the coming period.

Is a Copper Supply Shortage Looming?

Geopolitical conflicts in the Middle East and the closure of the Strait of Hormuz pushed copper prices higher earlier this year. The Middle East is a major source of sulfur and sulfuric acid used in copper extraction processes, and the resulting pressures helped drive copper to a record $14,527 per metric ton around the middle of the year.

Gregory Shearer, head of Base and Precious Metals Strategy at JPMorgan, believes the medium-term environment remains supportive for copper despite prices reaching such elevated levels.

Why Copper Prices Could Remain Supported

Shearer said that persistently constrained mine supply, continued production weakness and structurally supported demand trends linked to electrification and data center capital expenditure remain intact, even with the Federal Reserve potentially raising interest rates later this year.

Shearer also identified another factor that could push copper prices higher over the coming period.

“In our view, tariff uncertainty has been an important part of copper’s rally over the past six months, creating a tug-of-war between the US and China for copper units,” he said.

He explained that the global refined copper market is relatively well supplied, but China, which runs a copper deficit and still needs imports, is facing greater competition as metal flows into the United States. This has effectively raised the minimum price China must be willing to pay to secure supplies.

How US Tariff Policy Could Affect Copper Flows

The market remains in wait-and-see mode as the administration of US President Donald Trump decides how to approach copper under its Section 232 tariff review, which covers imports that the US Commerce Department determines could threaten national security.

A tightening of trade policy would create an incentive to ship copper into the United States before any tariffs take effect, providing further support for prices.

“We are still waiting for an announcement of that kind,” Shearer said. “Ultimately, we expect this tug-of-war to continue, and we think it will be very important in determining prices through the remainder of 2026.”

Aluminum Prices Hinge on Hormuz and Chinese Policy

When conflict erupted in the Middle East earlier this year, two of the world’s largest aluminum smelting facilities, Emirates Global Aluminium’s Al Taweelah complex and Aluminium Bahrain, were forced to halt operations.

Together, the two facilities account for more than 6% of global aluminum supply.

Although both facilities have reportedly resumed operations, aluminum exports through the Strait of Hormuz continue to face recurring disruptions as the conflict escalates and subsides, while negotiations have yet to produce a final agreement.

At the same time, after prices eased somewhat during the summer, the aluminum market is facing a substantial deficit this year that could persist for an extended period. That means either renewed escalation or a meaningful de-escalation of the conflict could potentially push prices higher.

“A renewed escalation of the conflict and continued restrictions on shipping through the Strait create the risk of further damage to aluminum smelting infrastructure, as well as additional shutdowns due to shortages of alumina,” Shearer said.

He added that a clearer and more sustainable de-escalation could also support prices because it would remove significant downside risks to the macroeconomic environment and underlying demand, while the aluminum market would still be facing a substantial supply shock through the remainder of the year.

What the Aluminum Supply Deficit Could Mean

Aluminum prices are forecast to reach $3,800 per metric ton in the third quarter of 2026, before easing to $3,700 in the fourth quarter and gradually declining to $2,750 by the fourth quarter of 2027.

The market is also expected to face a 1.7 million metric ton deficit in primary aluminum in 2026, an “invisible” shortage gradually accumulating within the market, driven partly by China’s self-imposed production capacity ceiling of 45 million metric tons.

“Given the scale of the supply shortfall facing the market, the ex-China market needs China to continue offsetting lost Middle Eastern volumes through higher exports of aluminum products,” Shearer said.

Chinese production could exceed 45 million tons as some smelters maximize efficiency, but Shearer expects continued inspections and greater scrutiny of energy consumption and industrial emissions to constrain output, preventing production from significantly exceeding the capacity ceiling.

How Chinese Export Policy Could Tighten Aluminum Supply

Chinese restrictions on aluminum exports could add further upside pressure to prices.

Shearer said China currently holds comfortable aluminum inventories. However, if the base-case scenario materializes, Chinese inventories are expected to begin declining over the coming months as exports to the rest of the world increase substantially.

In that scenario, Chinese authorities could move to curb aluminum exports, either by imposing additional export duties on aluminum products or by directly limiting or restricting shipments.

Shearer said that if this risk materializes, aluminum prices on the London Metal Exchange could rise sharply and potentially exceed even the current bullish forecasts for the remainder of 2026.

Steel Prices Vary Sharply Across Regions

Like copper and aluminum, steel prices are affected by global conflicts. However, steel differs from the other two metals because it is a manufactured product rather than a raw element.

The global steel benchmark currently stands at around $1,186 per metric ton based on hot-rolled coil prices.

In addition to the closure of the Strait of Hormuz, the Houthi blockade of the Red Sea has increased volatility in shipping costs for raw materials needed in steelmaking, including iron ore.

How Trade Rules Are Affecting Steel Prices

At the same time, steel producers successfully pushed for materials used in steel production to be exempted from Section 301 tariffs, which the US government imposes on foreign countries involved in unfair trade practices, intellectual property theft or failures to prevent the entry of goods produced using forced labor.

The exemption could help keep costs relatively stable and prevent sharp price increases.

In fact, tariffs are generally viewed as supportive of steel prices in both the United States and the European Union, where a tariff-rate quota system, or TRQ, recently came into effect.

The system establishes a strict annual ceiling of 18.3 million metric tons for the amount of foreign steel allowed to enter the EU market without tariffs. Any imports exceeding that threshold face a 50% duty.

The tariff-rate quota is considered supportive of higher steel prices because it is designed to prevent large volumes of cheap steel from flooding the market and driving prices lower.

Why China’s Steel Market Remains Under Pressure

In China, meanwhile, steel demand has remained weak because of the prolonged downturn in the property sector.

Reports indicate that steel mill profit margins turned negative during June and July, having deteriorated since May because of falling steel prices and rising coking coal costs, which jumped following a fatal coal mine accident in May.

What Happens Next for Industrial Metal Prices

Overall, steel prices continue to vary significantly from one region to another, with trade protection measures and supply disruptions remaining key forces shaping the direction of prices over the coming period.