Prolonged Iran war could hit top copper miners as surplus risk grows, Bloomberg Intelligence warns

Bloomberg Intelligence warns that a prolonged Iran war could push copper into surplus, cut miner earnings and pressure prices as energy costs and weaker demand hit the sector.

A prolonged war involving Iran could significantly weaken the outlook for the global copper market, potentially pushing it into surplus and hitting the earnings of major mining companies, according to Bloomberg Intelligence (BI).

The warning comes as analysts assess the possible impact of a drawn-out conflict that disrupts flows through the Strait of Hormuz, a critical global energy shipping route. Under that scenario, oil prices could rise above US$150 a barrel, slowing economic growth and capping copper demand growth at around 0.5% to 1%, BI said.

That would likely send copper prices below US$10,000 per tonne and leave the refined market with a surplus of between 100,000 and 200,000 tonnes, creating a much weaker environment for producers than many current forecasts assume.

Southern Copper, Antofagasta and First Quantum face earnings pressure

According to Bloomberg Intelligence, the financial impact of such a scenario could be substantial for major copper miners.

Earnings could decline by around 20% at Southern Copper, 32% at Antofagasta, and as much as 55% at First Quantum, reflecting both higher operating costs and lower copper prices than current market consensus expects.

Among the companies analyzed, Southern Copper appears to be best positioned in a downside scenario because of its lower-cost base. First Quantum, by contrast, faces the highest level of risk due to its relatively higher cost profile and uncertainty surrounding the restart of Cobre Panamá, which analysts expect to make a meaningful contribution by 2027.

If the conflict were to last longer than a year and flows through Hormuz remained constrained, softer demand would expose the global cost curve, leaving higher-cost producers especially vulnerable.

Copper market would remain highly sensitive to energy-driven inflation

Grant Sporre, global head of metals and mining at Bloomberg Intelligence, said the sector remains exposed to the broader macroeconomic consequences of a prolonged geopolitical shock.

“While copper’s long-term fundamentals remain intact, near-term pricing and margins are highly sensitive to energy-driven inflation and supply disruptions,” he said.

The outlook highlights how geopolitical tensions in the Middle East could ripple across commodity markets, leaving copper caught between weaker demand and tighter supply inputs such as sulfur.

Even though the global economy is less dependent on oil than in previous decades, a sharp increase in energy prices could still reignite inflation, delay interest-rate cuts and weigh on industrial activity, limiting copper’s upside while squeezing margins across the mining industry.

Shorter conflict would have a more limited impact on copper prices

Bloomberg Intelligence said a multi-month conflict would be less damaging than a prolonged war, with the copper market likely remaining broadly balanced in 2026 and prices trading in a range of US$10,500 to US$11,500 per tonne.

Under a faster resolution scenario, the market could return to a modest deficit, supporting prices closer to US$12,000 per tonne.

Still, analysts noted that rising inventories — now close to 1.4 million tonnes — point to weaker demand conditions and a buyers’ market, suggesting that any price rally may remain capped until stockpiles return to more normal levels.

Supply constraints could partly offset downside risk

BI analysts had already expected slower global copper demand growth of around 2% to 2.3% in 2026, as elevated prices reduce affordability. At the same time, they warned that it may still be difficult to increase mined supply meaningfully, even allowing for 1.1 million tonnes of disruption capacity, as stoppages continue at major operations.

Some supply-side risks could partially limit the downside. Disruptions to sulfur shipments from the Gulf may constrain output in the Democratic Republic of Congo, where around 50% to 60% of copper production depends on sulfuric acid.

Persistent mine disruptions and tight concentrate markets could also make it difficult to lift supply materially in 2026, reducing the scale of any potential surplus.

Higher costs could squeeze margins across the sector

Higher costs remain one of the main concerns in BI’s downside scenario. The firm estimates that a prolonged conflict could lift unit costs by 10% to 20%, with sulfuric acid and other key inputs driving broader inflationary pressure.

In that environment, high-cost producers could see margins compress to around 40% in 2026, down from roughly 70% in 2025. All-in margins would move closer to long-run averages, raising the risk of lower capital spending and delays to new project approvals.

China demand outlook adds another layer of uncertainty

The demand outlook in China is also adding to concerns. Bloomberg Intelligence said its proxy for Chinese copper demand fell to a multiyear low late last year, pointing to growth of just 0.5% to 1% in 2026, well below 2025 levels.

Weakness in the property sector and softer industrial activity are expected to weigh on copper consumption, further complicating the near-term market outlook.

Overall, the message from BI is that copper’s long-term structural deficit story may not disappear, but it could be delayed as short-term geopolitical shocks reshape demand, costs and investment timelines across the industry.