Just as copper prices hit record highs amid supply concerns, Goldman Sachs injected a dose of sobriety into the market's exuberance. The bank believes that the global copper market will not experience a shortage before 2029.
Goldman Sachs has injected a note of caution into the debate over the outlook for copper, stating that its rally above $11,000 per ton will prove to be short-lived as there remains an excess of metal to meet global demand.
Analysts at the bank, including Aurelia Waltham, wrote in a report: 'The recent rise in copper prices is largely based on expectations of future market tightness rather than current fundamentals. We do not expect the current breakout above $11,000 to persist.'
Amid concerns that copper is being rushed to the United States ahead of global tariff impositions, leading to a tightening of global supply, copper prices surged to a record level of $11,540 per ton on the London Metal Exchange on Wednesday. Last week, commodities trading firm Mercuria Energy Group Ltd. warned of an 'extreme' mismatch in supply, further fueling the rally.
Asia-Pacific mining stocks followed copper's rise on Thursday. CMOC Group Ltd., listed in Hong Kong, rose 6%, while Capstone Copper, listed in Australia, surged by as much as 8.2%. Other mining stocks also saw widespread gains.
Although Goldman Sachs raised its copper price forecast for the first half of next year and stated that U.S. tariff-related trade will support prices, the bank suggested that a 'severe undersupply' of inventories outside the U.S. could be avoided by increasing regional premiums and tightening spreads on the London Metal Exchange.
Goldman Sachs stated that demand this year will fall about 500,000 tons short of supply, and a copper shortage will not occur until 2029.
The analysts wrote: 'We project a much smaller surplus of 160,000 tons in 2026, which brings the market closer to balance, meaning we do not expect the global copper market to enter a shortage anytime soon.'
