01 THE SETUP

Two notes landed days apart. And, on the surface, they contradict each other.

Macquarie (via mining.com) says the copper rally is “running ahead of reality” and “remains caught between bullish investor sentiment and weakening physical fundamentals.”

ING (via FXStreet) highlights “supportive fundamentals for Copper, with tightening LME warehouse dynamics and strong physical demand.”

Same metal, same week, same price. One bank says the rally has outrun fundamentals; the other says fundamentals are holding it up.

Pick a side?

Or don’t. They might not be answering the same question.

02 WHY IT MATTERS

A quick read suggests a contradiction. A closer read suggests the two notes are aimed at different targets.

Macquarie is answering a valuation question: does the global supply-demand balance justify current copper prices?

Its answer is no. In its Spinning Plates compendium, Macquarie sees a 262,000-tonne refined surplus in 2026, surpluses averaging more than 700,000 t/yr in 2027-28, visible stocks up over 870,000 tonnes since early 2025, weak Chinese buying at these prices, and soft premiums outside China.

ING is answering a different question: is there anything in today’s market to support current copper prices?

Its answer is yes. ING’s Warren Patterson and Ewa Manthey flag a 23,000-tonne one-day jump in LME cancellations, cancelled warrants hitting roughly 43% of LME inventory, on-warrant stocks at their lowest since February, and metal still being diverted toward the US. Copper available for immediate delivery through the LME system is shrinking — and that can support a price even when the global market is amply supplied.

The key point: “Support” and “justify” are not the same word.

Copper can be overpriced relative to the global balance and supported by tight availability in the places and forms traders need it. These positions are compatible, and they can exist at the same time

The apparent contradiction only appears because “fundamentals” tend to get compressed in the headlines.

03 THE DECODE

“Fundamentals” are not one and the same thing. There are at least four that the analysts are leaning on.

Two of these are at the heart of the apparent contradiction:

The third fundamental the banks are leaning on is trade-flow. Here, there is some mild disagreement between ING and Macquarie. Notably, about what LME warrant cancellations mean for ING.

ING wants to say LME warrant cancellations highlight (at least, in part) “strong physical demand.” Macquarie argues any apparent ex-US tightness is artificially created by the tariff trade.

But those are two different stories, and a cancelled warrant doesn’t say which is true — a cancelled warrant records an instruction to remove metal from the deliverable pool; it does not tell us why. So it might mean genuine physical demand. Or, it might be nothing more than arbitrage-driven relocation, financing decisions, or pre-tariff positioning.

The geography here tilts toward the latter. Cancellations cluster in Taiwan, South Korea and Singapore — natural staging points for metal being marshalled toward the US, not obviously where an industrial demand surge shows up.

Finally, we also have the structural argument.

This is less central to the contradiction — ING’s note remains silent here. However, it’s worth taking a moment to consider what Macquarie says. While it expects refined production to grow 2.4% annually against 2.8% demand growth through 2030, it also highlights growing surpluses — 600,000-tonne last year, another 262,000-tonne surplus this year (even after allowing for disruptions), and 700,000+ tonnes in both 2027 and 2028.

One caveat worth noting:

Macquarie is sceptical of near-term AI-driven copper demand. They argue project cancellations and delays mean “the copper impact may be smaller and slower than the market assumes.” But that conclusion depends partly on what “the market assumes.” And there is evidence that at least some serious analysis was already filtering delayed and cancelled projects out.

SemiAnalysis, for one, argues that the “half of 2026 datacenter capacity is cancelled” story is misleading and built on a flawed denominator. They say apparent cancellations and delays cluster in an early-stage signalling layer that serious forecasts never counted. Indeed, their own year-end 2026 build forecast moved ~1%, despite what the headlines read.

That does not prove copper investors have priced AI demand correctly. But it does mean we cannot infer from rising delay and cancellation headlines that demand expectations supporting copper must also have fallen sharply. Some of the money betting on copper may have already been following more grounded forecasts — forecasts that have barely budged.

04 WHAT TO WATCH
 
Now → the tariff decision (if it ever comes): The whole standoff is hostage to US policy. Resolution either way should materially weaken the tariff-driven arbitrage supporting the current flow toward the US.

The LME warrant data: Watch whether cancellations keep clustering in Asian staging locations (relocation) or start showing up as genuine drawdown into consumption (demand). The cash/3-month is one tell: real physical tightness can push it toward backwardation; a contango can indicate tightness is more about location than shortage.

H2 2026 → 2027: If Macquarie’s surplus is real, the deliverable-market tightness ING sees is temporary, and prices grind down as trapped US metal eventually reverses out. If instead the drawdowns turn into sustained physical consumption, ING’s “support” becomes the floor and Macquarie’s correction keeps getting deferred.

The AI wildcard: Track delivered megawatts, transformer and switchgear backlogs, and actual equipment orders rather than project announcements or cancellation headlines.

/ Stop Saying Half of 2026 US Datacenter Capacity Is Canceled

AI demand features in many copper bull theses. Meanwhile, headlines claiming half of expected datacenter builds are cancelled or delayed have proliferated. SemiAnalysis argues the scare is overblown.

/ Ivanhoe Sees Congo Copper Output Rising in Second Half 2026

Ivanhoe held 2026 guidance at 290,000-330,000 tons, implying a steep ~28% second-half ramp after seismic disruptions forced earlier cuts. Whether this key growth source delivers or not is a supply-side swing factor to watch.

/ China Expands Strategic Mineral Toolkit With New Investment Firm

Beijing created an NDRC-backed vehicle to coordinate overseas mining investment. The move suggests China sees future mineral supply as requiring more state-backed capital, political risk absorption and deal coordination — not merely higher bids from individual companies.

That’s the wire for today. Until next time, mind the word everyone's using differently.

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