Will the LME copper price average below $3.50/lb for any 6-month period in 2026?

Copper is currently trading near record levels above $4.50/lb. A 6-month average below $3.50 would require a >22% sustained decline — a historically extreme move that has occurred only during major global recessions (2008-2009, early 2020 briefly). The structural copper supply deficit (~320K tonnes) supports prices. Electrification, EV adoption, and data center buildout provide secular demand tailwinds. While a recession could push copper below $3.50 temporarily, sustaining it as a 6-month average would require a deep, prolonged downturn. China's infrastructure spending continues to provide a demand floor. The probability of this scenario materializing in 2026 specifically is very low.

The magnitude of decline required (from >$4.50 to <$3.50 sustained) is extreme. Copper price cycles typically take 12-24 months to move from peak to trough. Even in a recession scenario, a 6-month average below $3.50 requires the crash to begin almost immediately and sustain. The committee noted the 320K tonne supply deficit is 'not independently verified' — if the deficit is overstated, prices could correct more than consensus expects. Trade war escalation (tariffs on Chinese manufacturing) could compress industrial demand faster than supply adjusts. But even these scenarios are more likely to produce $3.80-4.00 copper than sustained sub-$3.50.

From the analysis facts: SCCO remains profitable at $2.50/lb copper. The relevant question is not whether $3.50 is possible (it is) but whether a 6-month average below $3.50 can materialize during 2026 specifically. This requires both a trigger (global recession, China property collapse, trade war) and sustained duration (6 months of average <$3.50). Even during COVID, copper's 6-month average only briefly approached these levels before V-recovering. The structural demand from energy transition makes sustained low prices harder to achieve than in previous cycles. Very low probability.

Copper needs to fall >25% from current levels AND sustain that decline for 6 months. This hasn't happened since 2015-2016 (China slowdown + commodity supercycle bust). Current fundamentals are much stronger: tight supply, energy transition demand, limited new mine capacity. A recession could push spot prices down temporarily, but 6-month averages are much more resistant to brief spikes down. Extremely unlikely in 2026.

While the base case is very unlikely, several tail risks could compound: (1) China property sector collapse accelerating, (2) global trade war via tariff escalation reducing industrial output, (3) copper recycling and substitution increasing supply. The committee's note that the 320K tonne supply deficit is 'not independently verified' is important — if the deficit is actually smaller or turns to surplus, prices could correct sharply. These are low-probability scenarios but not negligible. Assigning 12% to capture the compound tail risk of multiple demand shocks occurring simultaneously.

The question asks about a 6-month AVERAGE below $3.50, not a spot price touch. This is a much higher bar. Even in 2008, the 6-month average didn't spend long below equivalent real prices. Current copper fundamentals (tight supply, structural demand from electrification) provide a much stronger floor than in previous cycles. Short of a synchronized global depression, this scenario is extremely unlikely in 2026. The Myth Meter's STRETCHED assessment requires $4.50+ copper — but that analysis didn't conclude copper would crash, only that the premium valuation prices in sustained high copper.

From >$4.50 to a 6-month average below $3.50 requires a 25%+ sustained crash. Only happens in deep recessions. Supply deficit and energy transition support prices. Very unlikely in 2026.

Low probability but not zero. Trade war escalation, China demand shock, or unexpected supply increase could compound. But 6-month average is very hard to move. 10% captures tail risk while reflecting the extreme move required.

Current copper near record levels. Supply tight. Demand structurally supported by electrification. 6-month average below $3.50 requires catastrophic demand destruction. Not impossible but very unlikely in 2026. Single-digit probability appropriate.