Will LME copper prices fall below $3.50/lb at any point before December 31, 2026?

Current copper spot is ~$4.60/lb. A decline to $3.50/lb would represent a ~24% drop within 9 months. While copper can be volatile, a decline of this magnitude typically requires a severe global recession, Chinese demand collapse, or major supply surprise. The electrification demand thesis provides structural support, and current supply constraints from underinvestment in new mines create a floor. However, 'at any point' in the 9-month window means even a brief intraday breach counts. The committee's analysis noted copper can decline 30-40% in cyclical downturns, but starting from $4.60 to $3.50 is only 24%.

The $3.50/lb threshold is approximately $7,716/tonne on LME. Copper has not traded below this level since 2020. The structural supply deficit from decades of underinvestment in new mining capacity, combined with accelerating electrification demand, creates a higher floor than historical cycles suggest. A global recession severe enough to push copper below $3.50 would likely trigger central bank intervention that supports commodity prices. The 'any single day' criterion adds some probability of a flash crash scenario, but LME has trading limits.

The committee is correct that copper prices CAN decline 30-40% in cyclical downturns. From $4.60, a 30% decline reaches $3.22 — below the threshold. The key question is the base rate of 30%+ copper declines within a 9-month window. Historically, such declines occur in severe recessions (2008, 2020) and are relatively rare in the absence of systemic shock. Current global macro environment shows some recession risk but not at the 2008/2020 level. Slightly higher probability than runs 1-2 due to tail risk from potential US-China escalation or financial crisis.

Starting from $4.60/lb, reaching $3.50 requires a 24% decline. The copper supply-demand balance is tight due to years of underinvestment. Electrification demand is accelerating. Global copper inventories are low. Even in 2022's significant downturn, copper only briefly touched $3.20 before recovering. The structural backdrop is more supportive now than in 2022. Very low probability absent a severe financial crisis.

The committee's CONDITIONAL classification on copper dependency is well-founded, but the question asks about a specific price level within a specific timeframe. At current prices, there is a 30% cushion above the threshold. Major risk factors that could trigger this: US recession deepening, Chinese property crisis worsening, global financial contagion. These are real but not probable scenarios within 9 months. Hudbay's own reserve pricing at $4.30 (conservative) reflects management's view that lower prices are possible but not their base case.

I want to be careful not to dismiss tail risk. The committee noted that copper can decline 30-40% in cyclical downturns regardless of secular trends. US-China trade escalation is an active risk factor that could disrupt copper demand from the largest consumer. A Chinese economic slowdown combined with tariff uncertainty could create a cascading price decline. While the base case favors copper staying above $3.50, the 9-month window and 'any single day' criterion mean a brief panic-driven breach is not negligible.

Copper at $4.60, threshold at $3.50 — needs 24% decline. Tight supply, electrification demand, low inventories all support prices. Would require severe recession. Low probability.

Structural copper supply deficit and electrification demand provide strong floor. Even 2022's downturn only briefly breached $3.50. Current starting point is higher. Very low probability within 9 months.

Low base probability but not zero. Flash crash, financial crisis, or Chinese demand collapse could trigger brief breach. 9-month window adds some cumulative probability. Still well below 15%.