Goldman Sachs has injected a note of caution into the current optimistic discussion surrounding copper's outlook. The bank stated that the surge in copper prices above $11,000 per ton would be short-lived as there remains ample global supply to meet demand.
According to Zhitong Finance, Goldman Sachs has injected a note of caution into the current optimistic discussion surrounding copper's outlook. The bank stated that the surge in copper prices above $11,000 per ton would be short-lived as there remains ample global supply to meet demand.
Analysts, including Aurelia Walther, wrote in a report: "Much of the recent increase in copper prices is based on expectations of future market tightness rather than current fundamentals. We expect the current move above $11,000 will not be sustained."
Amid concerns that copper was being urgently shipped to the U.S. ahead of potential tariff increases, leading to a tightening of global supplies, copper prices surged to a record high of $11,540 per ton on the London Metal Exchange (LME) on Wednesday. Last week, trading firm Mercuria Energy Group’s warning about an 'extreme' dislocation in supply further fueled this market sentiment.
Although Goldman Sachs raised its copper price forecast for the first half of next year and indicated that U.S. tariff-related transactions would support prices, the bank noted that the risk of 'excessively low' inventories outside the U.S. could be mitigated by increasing regional premiums and narrowing LME spreads. Goldman expects demand to outstrip supply by around 500,000 tons this year, with a copper shortage not expected until 2029.
The analysts wrote: "Although we project a much smaller surplus of 160,000 tons in 2026, bringing the market closer to balance, this implies that we do not anticipate a global copper shortage occurring anytime soon." They added that copper prices in 2026 would remain "capped within" the range of $10,000 to $11,000 per ton.
On Thursday, LME copper prices edged slightly higher. As of this writing, LME copper prices fell marginally by 0.01% to $11,479 per ton, extending their year-to-date gains to 31%. Mining stocks in the Asia-Pacific region followed copper prices higher, with Australia-listed Capstone Copper rising as much as 8.2%, among others.
Li Xuezhong, Dean of Chaos Tiancheng Research Institute, stated: "This rally is just beginning, and we remain bullish on copper prices." He pointed out that the large volume of metal withdrawals from LME warehouses on Wednesday "intensified immediate market concerns over supply tightness."
Nevertheless, copper prices have long been the subject of bold predictions, many of which often diverge from reality. While a series of shutdowns at major mines through 2026 put pressure on supply, global demand for copper has also recently slowed despite obvious bright spots such as green technology.
As a key market for copper, demand in China has declined significantly in recent months. Goldman Sachs predicts that China’s copper consumption will drop nearly 8% year-on-year in the fourth quarter of this year. The bank forecasts growth of 2.8% for next year.
Editor/Liam
