Copper and aluminium rally 30% amid volatility: How should investors position across holding periods?

• Copper and aluminium prices hit multi-year highs in early 2026
• Copper rises on supply issues; aluminium on high power costs
• Short-term volatility expected; long-term outlook positive

Did our AI summary help?

Base metals copper and aluminium started 2026 on a strong note, rising to their highest level, after climbing steadily through 2025.

The futures price of copper on MCX was trading at Rs 1,217.50 per kilogram on February 13, as of 1:25 pm (IST), up 30 percent from a year ago period at Rs 862.50 per kilogram. Similarly, the aluminium price has gone up 30-35 percent from Rs 230-240 per kilogram to Rs 309.65 per kilogram.

Copper and aluminium prices are expected to remain supported in the near to medium term, though investors should brace for periodic macro-driven volatility as global growth signals, China’s policy stance, and energy prices continue to shape market sentiment.

According to Ross Maxwell, Global Strategy Operations Lead at VT Markets, copper has stronger structural backing than aluminium, largely due to its central role in electrification, renewable energy, electric vehicles (EVs), and grid expansion. However, supply-side constraints remain a defining feature of the copper market.

“Declining ore grades and a lack of meaningful new mine supply limit copper availability in the medium term,” Maxwell said, adding that while long-term demand trends are robust, near-term price action will be sensitive to China’s property and industrial momentum, as well as manufacturing activity in the US and Europe. Any renewed global growth concerns could trigger temporary pullbacks.

Aluminium, by contrast, tends to move more closely with the economic cycle and is heavily influenced by production costs, especially electricity costs. Although demand growth is broad-based, supply remains highly responsive to power prices, government policies, and geopolitical developments.

“Energy shocks, disruptions to alumina and bauxite supply, or logistics bottlenecks can lift aluminium prices, while prolonged cheap power and capacity additions can keep them subdued,” Maxwell noted. He also pointed out that higher scrap availability and material substitution during economic slowdowns can cap upside potential.

Overall, Maxwell expects range-bound trading in both metals, with short-term volatility spikes around China stimulus announcements, interest-rate and foreign-exchange movements, energy price swings, and changes in inventories. His bias remains modestly bullish for copper and neutral to slightly bullish for aluminium.

Supply constraints driving copper more than demand recovery

Echoing the focus on supply, Navneet Damani, Head of Research, Commodities, at Motilal Oswal Financial Services, said current copper prices are being driven more by constrained supply than by a clear cyclical rebound in demand.

“Mine outages, concentrate shortages, and smelter issues are doing most of the heavy lifting,” Damani said. He estimates mine supply growth for 2026 at only about 1–1.5 percent.

Although Chinese refined copper demand softened in late 2025, Damani believes underlying support from infrastructure and energy transition remains intact. “The long-term demand story is solid, but near-term prices reflect a fragile supply situation layered on top of that outlook,” he said.

How investors can position across time horizons

Damani advises investors to clearly distinguish between short-term trading and long-term investing in metals.

Short-term trades are driven by “macro noise” such as inflation data, central bank commentary, US dollar moves, inventory changes, and geopolitical developments, and typically require tighter risk management.

Long-term investments, on the other hand, should focus on structural themes. For base metals like copper and aluminium, the key drivers are electrification and the global energy transition. These trends are expected to play out over several years rather than weeks or months.

On what currently matters most for metals markets, Damani stresses that there is no single dominant factor.

“For base metals like copper and aluminium, China’s demand outlook and physical supply tightness are far more important than central bank policy,” he said. Geopolitics may spark short-term volatility, but medium-term trends are set by real rates, reserve buying (in the case of gold), and physical market conditions.