Based on the U.S. Section 232 copper import investigation, the market has experienced significant distortions, with the U.S. frantically grabbing copper, leading to shortages in non-U.S. regions and raising concerns about regional shortages. Due to supply mismatches, Goldman Sachs has raised its copper price forecast for the second half of the year and expects a peak in August.
On June 26, according to news from the Chasing Wind Trading Desk, Goldman Sachs stated in its latest research report that since the U.S. Section 232 copper import investigation, the U.S. has imported about 400,000 tons of copper, equivalent to 6-7 months of import demand, resulting in a copper shortage in non-U.S. regions.
Wallstreetcn recently pointed out in an article that under the potential threat of import tariffs, copper is being shipped globally to the U.S., and the available inventory at the London Metal Exchange has decreased by about 80% this year, currently amounting to less than a day's global usage.
Based on global supply mismatches, Goldman Sachs stated in its report that it has raised its LME copper price forecast for the second half of 2025 from the previous $9,140 per ton to $9,890 per ton, and expects it to peak at $10,050 per ton in August.
Regarding the trend of copper prices, Goldman Sachs believes that the timing of tariff implementation is a key variable. In the baseline scenario, a 25% tariff is expected to be implemented in September. Goldman Sachs recommends going long on the December COMEX-LME copper arbitrage, as the market currently significantly underestimates the possibility of a 25% or even 50% tariff.
According to previous articles by Wallstreetcn, in February this year, Trump announced the initiation of a national security investigation into copper imports under Section 232 of the Trade Expansion Act, considering whether to impose tariffs on copper imports for national security reasons.
<h2>Tariff Investigation Creates Unprecedented Market Divergence</h2>
The report states that the U.S. Section 232 copper import investigation continues to drive an unusually large price gap between COMEX (U.S.) and LME (U.K.) copper prices. Due to higher COMEX prices (as the market expects tariffs on copper imports), the U.S. has excessively imported about 400,000 tons of copper this year, equivalent to 6-7 months of import demand.
This distortion has caused U.S. copper inventories (including unreported inventories) to soar to over 100 days of consumption, compared to just 33 days at the beginning of the year. In contrast, inventories in other regions of the world are less than 10 days.
Goldman Sachs pointed out that to completely close the arbitrage opportunity for U.S. imports, the price difference between COMEX and LME copper needs to reach an inversion of about $600 per ton, which means that U.S. inventories will continue to rise before the results of the tariff investigation are announced.
The report emphasizes that although copper inventories in non-U.S. regions are low, the global copper market overall remains in moderate surplus. Considering unreported inventories in the U.S., global inventories are expected to increase by about 280,000 tons in the first half of 2025, with a slight surplus of 105,000 tons expected for the entire year.
However, this global surplus is only reflected in the U.S. market. Goldman Sachs predicts that the U.S. refined copper will see a surplus of about 400,000 tons in 2025, while other regions of the world will experience regional deficits of about 200,000 tons each
Goldman Sachs also pointed out that the tightness in the copper market outside the United States has led to a significant narrowing of the front end of the LME futures curve. LME spot copper briefly broke through $10,000/ton on June 23, with this week's spot price at a premium of $95-379/ton over the three-month futures. Analysis indicates that this huge spot premium suggests a supply shortage.
<h2>Goldman Sachs Raises Copper Price Forecast for the Second Half of the Year, Expected to Peak in August</h2>
Goldman Sachs has raised its LME copper price forecast for the second half of 2025 from the previous $9,140/ton to $9,890/ton. Specifically:
<blockquote>
<ul>
<li>Expected to peak at $10,050/ton in August</li>
<li>Expected to fall back to $9,700/ton in December</li>
</ul>
</blockquote>
Goldman Sachs stated that the price forecast increase is mainly based on two factors:
<blockquote>
First, a significant mismatch in global inventories, with the U.S. over-importing beyond initial expectations; second, China's economic activity remains relatively resilient. Goldman Sachs expects China's actual GDP growth rate in the second quarter to be slightly above 5%, with retail sales remaining resilient.
</blockquote>
Goldman Sachs also slightly lowered its 2026 copper price forecast from the previous $10,170/ton to $10,000/ton, expecting it to reach $10,350/ton in December. Goldman Sachs remains optimistic about copper prices in 2027, forecasting an average annual price of $10,750/ton, a price level sufficient to incentivize investment in Chilean brownfield mines.
<h2>Timing of Tariff Implementation as a Key Variable</h2>
Goldman Sachs maintains its baseline scenario (80% probability), which is to implement a 25% tariff on U.S. copper imports before September. In this scenario, it is expected that U.S. inventories will increase by 150,000 tons in the third quarter and decrease by 120,000 tons in the fourth quarter after the tariff is implemented. In contrast, inventories in other parts of the world are expected to continue declining in the third quarter and turn to increase in the fourth quarter.
If the tariff implementation is delayed beyond expectations, U.S. imports will continue into the fourth quarter, further tightening markets outside the U.S.
In a no-tariff scenario (which Goldman Sachs considers highly unlikely), COMEX prices would fall below LME prices, as the high U.S. inventories would need to be exported or delivered to U.S. LME warehouses.
Goldman Sachs reiterates its copper tariff trading recommendation: go long on December COMEX-LME copper arbitrage. Currently, the market-implied tariff rate is only 14%, significantly underestimating the possibility of a 25% or even 50% tariff.
Goldman Sachs stated that if a 50% tariff is implemented, the December COMEX-LME price spread could widen to nearly $5,000/ton, a significant increase from the current $1,350/ton

Goldman Sachs stated that the Section 232 copper import investigation has caused severe distortions in the copper market. The United States has excessively imported about 400,000 tons of copper, leading to inventories surging to over 100 days of consumption, while non-U.S. inventories are below 10 days. The forecast for copper prices in the second half of the year has been raised to $9,890 per ton, with expectations that it will peak at $10,050 per ton in August. They reiterated their recommendation to go long on the December COMEX-LME copper arbitrage trade, believing that the market has underestimated the likelihood of high tariffs being implemented

- The U.S. copper import investigation under Section 232 has led to significant market distortions, with the U.S. importing approximately 400,000 tons of copper, causing shortages in non-U.S. regions.  
- Goldman Sachs has raised its copper price forecast for the second half of 2025 to $9,890 per ton, expecting a peak of $10,050 in August, driven by supply mismatches and resilient economic activity in China.  
- The timing of potential tariffs is crucial, with Goldman predicting a 25% tariff implementation by September, which could further impact U.S. and global copper inventories.

Wallstreetcn

Goldman Sachs

The U.S. is seizing copper, and non-U.S. countries are facing shortages! Goldman Sachs raises its copper price forecast for the second half of the year, expecting a peak in August