欧洲金属：铜供应信号稀缺

Morganstanley

RESEARCHIdea

October30,202604:00PMGMT

metal&ROCK|Europe

CopperSignallingScarcity

Near-termphysicalindicatorspointtotighteningcopper

availability,withLMEtimespreadsrisingsharply,Chinese

physicalpremiumsatrecordhighsandminesupplychallenges.Weseecopperat$14,800/$14,400/tin4Q/1Qbutaremorecautiousona12mview.UStariffpolicyisthekeyuncertainty.

KeyTakeaways

InventoriesconcentratedintheUS:63%ofLMEstocksand~80%ofglobalvisiblestocksareintheUS,leavingex-UStightandsupportingtimespreads.

Chinaphysicalpremiumsatrecordhighs:Smeltermaintenanceandreducedscrapavailabilityaretighteningrefinedcoppersupplydespitesofterend-usedemand.

Minesupplychallengescontinue:Earningsseasonhasbroughtfurtherproductionguidancecutsandoperationaldisruptions.

Therearemanyoutcomesfor2027,particularlyaroundUStariffs,butshortterm,coppersignalspointtotightness.

Physicalindicatorssignalscarcity:DespitedivergingviewsatLMEWeek,theshort-termindicatorsshowaclearerpictureofnear-termcoppertightnesswithLME

timespreadssurgingandChina'sYangshanpremiumreachingarecordhigh.WhileLMEon-warrantstockshaverisen90ktoverthepasttwoweeks,mostadditionshavebeenintheUS,givingnorelieftotimespreads,withex-USinventoriesattheirlowestseasonallevelsince2023.InChina,smeltermaintenanceduringtreatmentchargenegotiationsandtighterscrapavailabilityaresupportingrefinedmetal

demanddespitesofterend-useindicators.Meanwhile,EuropeanphysicalpremiumsarebeingagreedatrecordlevelsasbuyerscompetewiththeUS.

ThepullintotheUScontinues:WeestimatetheUShasover-imported740ktof

copperYTD,or3.4%ofrefined"demand".ArrivalsremainelevateddespitethespotCOMEX-LMEspreadatzero,withthe3mforwardpremiumstill~$500/t.Thetariffdecisionholdsthekey:BothrulingouttariffsandimplementinganimmediateflattariffwouldlikelyhaltexcessUSimports,looseningex-USbalancesandweighingonprices.Afurtherdelaytothedecisionwouldsustainstockpiling,albeitpotentiallyataslowerpaceasonshoreinventorybuilds.Aphasedtariffcouldbethemostbullishoutcome,incentivisingacceleratedimportsaheadoffuturerateincreases,althoughwecouldseeaninitialslowdownastradersadjusttothetariff.

MSoutlook:Ona12mview,weseereasonstobecautiouscopper–minesupplyisexpectedtoreturntogrowthin2027,themarketwillhavehadmoretimetoadjusttoChina'sscrappolicy,andinmanyscenariosUSimportsarelikelytoslow,leavingRoWmarketsfeelinglooser.However,short-termindicatorslookmoreconstructive,asUSimportscontinuetodrawmaterialfromex-USmarkets.We

forecast

LME

copperat$14,800/tforQ4and$14,400/tforQ1.

Exhibit1:LMEtimespreadsarerisingevenwithhigherinventories,withthebuilddrivenbytheUS

600

400

LMECopperOnWarrantInventoriesvs.Cash-3mSpread

350

300

500

400

250

300

200

200

150

100

0

100

-100

50

LMECopperOnWarrantInventories(kt)(RHaxis)

CopperCash-3mSpread($/t)

0

-200

Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

Source:Bloomberg

Exhibit2:China'sYangshanpremiumhasreachedarecordhigh

CopperandtheYangshanPremium($/t)

250

ChinaYangshanPremium($/t)——LMECopper(RHaxis,Inverted)

200

150

100

50

0

-50

Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Source:Bloomberg

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthis

report.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

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organstanley

RESEARCH

Idea

CopperSignallingScarcity

Exhibit3:LMEcoppertimespreadsarerisingsharply,indicatingtightness

CopperCash-3mSpread($/t)

600

500

400

300

200

100

0

-100

-200

Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

Source:Bloomberg

Exhibit5:ButtheriseinLMEinventorieshasallbeenintheUS,whichisnow63%ofon-warrantstock

LMEOnWarrantCopper(kt)

600AsiaEuropeUS

500

400

300

200

100

0

01/01/202101/01/202201/01/202301/01/202401/01/202501/01/2026

Source:Bloomberg,MorganStanleyResearch

Exhibit7:TheChinaYangshanpremiumisatarecordhigh,indicatinggoodphysicaldemandforcopper

250

200

150

100

50

0

-50

CopperandtheYangshanPremium($/t)

ChinaYangshanPremium($/t)LMECopper(RHaxis,Inverted)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

Source:Bloomberg,MorganStanleyResearch

Exhibit4:ThisisunusualgiventherecentriseinLME

inventories,whichwouldnormallybringacorrectioninspreads

LMECopperOnWarrantInventories(kt)

400

350

300

250

200

150

100

50

0

Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

Source:Bloomberg

Exhibit6:Withex-USinventoriesverylowinabsoluteterms,theLMEforwardcurveappearstobeviewingtheUSinventoryasunavailable

GlobalEx-USCopperInventory(kt)

800

20222023202420252026

700

600

500

400

300

200

100

0

JanFebMarAprMayJunJulAugSepOctNovDec

Source:Bloomberg,MorganStanleyResearch

Exhibit8:TheChinaimportarbhasbeenvolatilebutopenedafewtimesduringSeptember

3,000

2,000

1,000

0

-1,000

-2,000

-3,000

-4,000

ChinaCopperArb(SHFE-LME)

imports

incentivised

Arb(RMB/tonne)LMECopper,$/t,RHAxis

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

Jan-25Apr-25Jul-25Oct-25Jan-26Apr-26Jul-26Oct-26

Source:Bloomberg,MorganStanleyResearch

organstanley

RESEARCH

Idea

Exhibit9:NewVATpolicychangeshaveweighedonscrapavailabilityinChina

250

200

150

100

50

-

-50

-100

-150

-200

DriversofChina'sRefinedCopperOutputGrowth(3mRolling)-

ktpm

ImpliedDomesticFeedstock(ore/scrap)/Stock

Movements

YoYGrowthinConc.Imports

YoYGrowthinScrapImports

Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24Jan-25Jul-25Jan-26Jul-26

Source:ChinaCustoms,NBS,MorganStanleyResearch

Exhibit10:Domesticfeedstock(concentrateandscrap)hasbeenamuchsmallercontributortoChina'srefinedoutput

growth,despitechallengessourcingconcentrateandscrap-thisislikelysupportingdemandforrefinedmetal

2,500

2,000

1,500

1,000

500

-

-500

ChinaFeedstockforRefinedCopperOutputGrowth(YoY,ktpa)

nImportedConcentrateImportedScrapnDomestic(Conc,Scrap)

202120222023202420252026

Source:ChinaCustoms,NBS,MorganStanleyResearch

Exhibit11:Annualtreatmentchargenegotiationsarestarting,witharecordgapbetweenspotandannualTCs

CopperTreatmentCharges($/t)

120

80

40

0

-40

-80

-160

-200

-240

-280

-120

annualcontract

spot(mine:smelter)

Jan-07Jan-10Jan-13Jan-16Jan-19Jan-22Jan-25

Source:Platts,MorganStanleyResearch

Exhibit13:China'senduseindicatorshavebeenmoremuted,particularlygridspendandrenewables

160%

110%

60%

10%

-40%

-90%

ChinaDemandIndicators(%YoY)

2023202420252026

14%

3%2%

-7%

0%-2%

25%

-54%

PropertyCompletions

SolarCellOutput

Solar

InstalledCapacity

Wind

Capacity

NEVoutput

Air

conditioner

Output

GridSpendWashingMachineOutput

Source:NBS,MorganStanleyResearch

Exhibit12:WhichusuallybringsChinasmeltermaintenance-thiscouldbelargerthisyearwithspotTCssoweak,keepingChineserefinedsupplytight

ChinaAnnualisedRefinedCopperOutput(ktpa)

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

202120222023202420252026

123456789101112

Source:ChinaNBS,MorganStanleyResearch

Exhibit14:Partlyoffsetbyexports,butthecountryisgraduallyunwindingVATrebatesinkeyareas

80%

70%

60%

50%

40%

30%

20%

10%

0%

-10%AirconditionerVehicleExportsWashingmachineWireandCableSolarmodulesStorageBatteriesexportsexports

Source:ChinaCustoms,MorganStanleyResearch

MorganStanleyResearch3

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RESEARCH

Idea

Exhibit15:TheUScontinuestoimportlargequantitiesof

copperaheadofatariffdecision,withstockpilingequivalentto3.4%ofglobaldemand

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

USCopperImportsandCOMEX-LMESpread

USSeaborneCopperImports(t/week)——COMEX-LMESpread(3m,$/t,RHAxis)

3,500

3,000

2,500

2,000

1,500

1,000

500

-

Jan-24Jul-24Jan-25Jul-25Jan-26Jul-26

Source:Bloomberg,MorganStanleyResearch

Exhibit16:ThisisdespitenopremiumforCOMEXoverLMEinthespotmarket

40%

35%

Dec-27

3mArb

Spotarb

30%

25%

20%

15%

10%

5%

COMEX-LMESpread(%)

Jan-24Apr-24Jul-24Oct-24Jan-25Apr-25Jul-25Oct-25Jan-26Apr-26Jul-26Oct-26

0%

-5%

Source:Bloomberg,MorganStanleyResearch

Exhibit17:Wesee1.4mlntonnesofstockpiledcopper,with~375ktnotvisibleinexchangeswarehouses

1,400

1,200

ExchangeInventoryExchangeStockpiling

USImpliedCopperStockpiling(kt)

COMEXInventoryLME

LMEOffWarrantNon

1,000

800

600

400

200

-

Mar-25May-25Jul-25Sep-25Nov-25Jan-26Mar-26May-26Jul-26Sep-26

Source:Bloomberg,MorganStanleyResearch

Exhibit19:Copper'sAIcorrelationsarerollingover

RollingCopper/AICorrelations

100%

80%

60%

40%

20%

0%

-20%

-40%

-60%

-80%

-100%

Copper/Mag73m

CopperAIETF3m

Copper/Mag76m

CopperAIETF6m

Jan-25Jul-25Jan-26Jul-26

Source:Bloomberg,MorganStanleyResearch

Exhibit18:TheDRChasbeengainingsharewithinUSimports,at~30%inrecentmonths

USCopperImportsbySource(ktpm)

250

ChileCanadaPeruwAustraliawDRCWOther

200

150

100

50

-

Jan-23Jul-23Jan-24Jul-24Jan-25Jul-25Jan-26Jul-26

Source:TradeMap,MorganStanleyResearch

Exhibit20:Butcopperhasgenerallybeenmorecorrelatedtoequitiesthanothermetals

6mRollingMetalsCorrelation

100%

80%

60%

40%

20%

0%

-20%

-40%

-60%

-80%

Dec-25Oct-26

Source:Bloomberg,MorganStanleyResearch

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RESEARCH

organstanley

Exhibit21:Recentguidancedowngrades

CompanyGuidance/Commentary

Glencore

FirstQuantum

GrupoMexico

MMG

LundinMining

Antofagasta

Freeport

Chile

3Qvolumesbelowconsensus,guidancemaintainedbutatlowerendofrange.

2026guidanceloweredby20ktatthemidpoint,delayedSouthEastDomestrippingthatextendsKansanshi’slowergradesinto2027,bringingsomeuncertaintyaround2027forecast.

Cut2026guidancefrom1.034mlntto1.026mlnt,a6ktdowngrade.

CutguidanceatKhoemacauto43-48ktondevelopmentdelays,from48-53ktpreviously(-5ktatthemidpoint).

Cut2026copperguidanceby~10ktto120–130ktonwinterstormdisruptions.3Qresultsstilltocome.

2027copperproductionguidanceof630–690kt,withthe

midpointof660kt~4%belowcompany-compiledconsensusof685kt.

Freeportcutcoppersalesguidancefrom3.1blnlbsto3blnlbsfor2026,andfrom3.8to3.7blnlbsfor2027.

Chile'sFinanceministersaidminesupplycouldfall7%YoYin2026,versustheCochilcoforecastfora2%drop,implyinga380ktdropratherthan110kt.

Source:MorganStanleyResearch,companyreporting

Idea

Exhibit22:Chile'scopperproductionisdown8%YTD

600

550

500

450

400

350

ChileCopperProduction(ktpm)

20222023202420252026

123456789101112

Source:Cochilco,MorganStanleyResearch

Exhibit23:

CopperSupply-DemandModel

unit202120222023202420252026e2027e2028e2029e2030e2031e2032e

WorldMineProduction

concentratesMt17.918.418.619.419.519.821.121.922.823.424.024.6

SX/EWMt3.43.53.63.73.83.93.83.83.83.63.23.0

disruptionallowance%0.0%0.0%0.0%0.0%0.0%1.8%5.5%5.5%5.5%5.5%5.5%5.5%

TotalMineProductionMt21.422.022.323.123.423.323.624.325.225.725.926.4

YoYchange

%

2.2%

2.7%

1.2%

3.9%

1.0%

-0.3%

1.2%

3.2%

3.7%

1.8%

0.6%

2.0%

Concentratebalance

-0.6

-0.8

-1.9

-1.8

-3.0

-4.6

-4.8

-4.3

-3.5

-3.0

-2.4

-2.0

TC/RCcontract

US$/t,¢/lb

59.5/5.95

65/6.5

88/8.8

80/8

21.3/2.1

0/0

-15/-1.5

-10/-1

0/0

10/1

20/2

34.6/3.5

compositeTC/RC/PPcharge

US¢/lb

15.3

16.7

22.6

20.5

5.5

0.0

-3.8

-2.6

0.0

2.6

5.1

8.9

WorldSmelterProduction

primary

Mt

17.3

17.7

17.9

18.7

18.8

18.7

19.2

19.9

20.7

21.3

21.9

22.4

secondary

Mt

3.3

3.3

3.5

3.9

4.3

4.5

4.6

4.8

4.9

4.9

4.9

4.9

TotalSmelterProductionMt20.621.021.422.623.123.323.824.725.626.326.827.4

imputedconcentratebalance

Mt

-0.6

-0.8

-1.9

-1.8

-3.0

-4.6

-4.8

-4.3

-3.5

-3.0

-2.4

-2.0

worldrefineryproductionelectrowon

Mt

3.6

3.7

3.8

3.8

3.9

3.9

3.7

3.7

3.7

3.5

3.0

3.0

primary

Mt

19.6

19.9

20.3

21.4

21.9

22.1

22.6

23.5

24.4

25.0

25.5

26.0

secondary

Mt

1.2

1.2

1.2

1.1

1.5

1.7

2.0

2.1

2.1

2.1

2.1

2.1

TotalRefineryProduction

Mt

24.3

24.8

25.3

26.4

27.3

27.6

28.4

29.2

30.2

30.6

30.6

31.1

YoYchange

%

2.3%

2.1%

2.0%

4.3%

3.5%

1.1%

2.7%

3.0%

3.2%

1.4%

-0.1%

1.7%

WorldCopperDemand

Mt

24.4

24.8

25.3

26.2

27.2

27.7

28.5

29.4

30.2

31.0

31.8

32.6

YoYchange

%

5.3%

1.9%

2.0%

3.3%

3.9%

1.9%

3.0%

2.8%

3.0%

2.6%

2.3%

2.6%

Chinademand

12.8

13.1

13.8

14.4

15.0

15.2

15.6

16.0

16.4

16.9

17.3

17.8

China'sYoYchange

%

3.7%

2.0%

6.0%

4.0%

4.0%

1.5%

2.5%

2.5%

3.0%

2.5%

2.5%

3.0%

non-China'sYoYchange

%

7.2%

1.9%

-2.4%

2.5%

3.7%

2.4%

3.6%

3.3%

3.0%

2.8%

2.1%

2.2%

ImpliedMarketBalance(beforeinventory)

Mt

-0.06

-0.02

-0.04

0.23

0.13

-0.07

-0.16

-0.13

-0.07

-0.45

-1.19

-1.50

RefinedStocksEndofPeriod

reportedrefinedinventorychangeofwhichUS

apparentchangeinunreportedinventories

kt

kt

kt

763

-497

-5

437

673

-90

-45

72

661

-11

47

-24

931

269

4

-44

1,328

398

363

-269

1,256

1,092

965

897

449

0

0

Inventory-to-usagerate

wks

1.6

1.4

1.4

1.9

2.5

2.4

2.0

1.7

1.5

0.8

0.0

0.0

MarketBalance

Mt

0.00

-0.02

-0.04

0.23

0.13

-0.07

-0.16

-0.13

-0.07

-0.45

-1.19

-1.50

Price

US$/t

$9,299

$8,892

$8,519

$8,928

$10,053

$13,760

$13,675

$12,800

$13,000

$13,000

$12,500

$12,500

US$/lb

$4.22

$4.03

$3.86

$4.05

$4.56

$6.24

$6.20

$5.81

$5.90

$5.90

$5.67

$5.67

Source:MSResearch,WoodMackenzie,Bloomberg;ICSG

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RESEARCH

Idea

WeekinReview

BaseMetals:Basemetalshavepostedamixedperformancethisweek.LMEandCOMEXcopperhavedropped0.7%and0.2%)

respectively)weigheddownbyAIspendingworriesdespitetightsupply.Zinchasgained3.6%asthemarketfocusesonsupply

concernsandLMEinventorystartedtorollover.Aluminiumisup1.1%asLMEandSHFEinventoriessawdrawdowns.Nickelhas

dropped2.1%afterastrongrallyonpotentialIndonesiasupplycutslastweekwhileleadgained0.4%.

PreciousMetals:Preciousmetalshavedroppedacrosstheboardthisweek.Goldisdown0.7%)withthepricefallingbelow

$4)000/ozonFriday)despiterealyieldseasingandaweakerdollar.Silverisdown6.9%whileplatinumandpalladiumhavedropped7.6%and6.8%)respectively.

Bulks:Ironorehasremainedlargelyflatthisweek)rising0.1%.Pricesinitiallyweakened)fallingbelow$90/tmid-week)althoughreceivedsomesupportasblastfurnacesrestartedfollowing

maintenanceinChina.Metcoalisdown0.7%asgradualminerestartsinShanxihelptoeasesupplyconcerns.Thermalcoalisdown1.3%.

140

130

120

110

100

90

Exhibit24:Basemetalspriceindices(12-monthrolling)

zincleadaluminiumnickelcopper

80

70

Source:Bloomberg,MorganStanleyResearch

Exhibit25:Preciousmetalsindices(12-monthrolling)

340——goldsilver——platinum——palladium

290

240

190

140

90

40

Source:Bloomberg,MorganStanleyResearch

Exhibit26:Bulkcommoditypriceindices(12-monthrolling)

160ironoremet-coalthermalcoalalltradedcoals(wtgavg) 150 140 130 120 110 100 90 80 70 60

Source:Platts,Bloomberg,MorganStanleyResearch

MorganStanleyResearch7

organstanley

RESEARCH

Idea

MorganStanleyPriceForecasts

Exhibit27:SummaryofMorganStanley'scommoditypriceforecasts(seton6Oct2026)

commoditygroupunit3Q26a4Q26e1Q27e2Q27e3Q27e4Q27e1Q28e2Q28e2026e2027e2028e2029e2030e2031e2032eLTrealLTnom.

BaseMetals

LMEAluminium

US$/lb

US$/t

1.46

3,228

1.41

3,100

1.36

3,000

1.32

2,900

1.27

2,800

1.27

2,800

1.27

2,800

1.27

2,800

1.48

3,272

1.30

2,875

1.27

2,800

1.32

2,900

1.27

2,800

1.27

2,800

1.27

2,800

1.13

2,500

1.34

2,952

LMECopper

US$/lb

6.40

6.71

6.53

6.35

6.12

5.81

5.81

5.81

6.24

6.20

5.81

5.90

5.90

5.67

5.67

4.85

5.73

US$/t

14,104

14,800

14,400

14,000

13,500

12,800

12,800

12,800

13,760

13,675

12,800

13,000

13,000

12,500

12,500

10,700

12,633

COMEXCopper

US$/lb

6.49

7.12

6.92

6.79

6.55

6.21

6.04

6.04

6.40

6.62

6.04

6.01

6.01

5.78

5.78

#N/A

#N/A

US$/t

14,305

15,688

15,264

14,980

14,445

13,696

13,312

13,312

14,113

14,596

13,312

13,260

13,260

12,750

12,750

#N/A

#N/A

LMENickel

US$/lb

7.51

7.71

7.87

7.94

7.94

7.71

7.71

7.71

7.82

7.86

7.71

7.71

8.16

8.16

8.16

7.44

8.78

US$/t

16,564

17,000

17,350

17,500

17,500

17,000

17,000

17,000

17,242

17,338

17,000

17,000

18,000

18,000

18,000

16,400

19,363

LMEZinc

US$/lb

1.74

1.93

1.93

1.86

1.77

1.72

1.59

1.50

1.67

1.82

1.52

1.36

1.36

1.36

1.36

1.34

1.58

US$/t

3,829

4,250

4,250

4,100

3,900

3,800

3,500

3,300

3,693

4,013

3,350

3,000

3,000

3,000

3,000

2,951

3,484

LMELead

US$/lb

0.84

0.87

0.86

0.86

0.86

0.86

0.86

0.86

0.87

0.86

0.88

0.91

0.91

0.91

0.91

0.74

0.87

US$/t

1,856

1,925

1,900

1,900

1