The recent strong rise in the base metals market is facing a critical moment for fundamental verification. Although the London Metal Index (LMEX), which covers six major industrial metals, has risen about 7% this year, Goldman Sachs has issued a warning that current price performance has begun to significantly diverge from physical demand.
On January 28, Trina Chen, co-head of equity research at Goldman Sachs, pointed out: “We have observed a negative reaction on the actual production side, and demand is beginning to decline.” The bank's latest survey on the copper market shows that customers in downstream sectors, from consumer electronics to industrial hardware, are reducing purchases, leading to a general decline in orders for processing enterprises. Notably, orders for grid construction, a traditional pillar of copper consumption, are also showing signs of slowing growth.
This round of metal price increases is mainly driven by expectations of tightening supply, a weak dollar, and expectations of interest rate cuts by the Federal Reserve. However, as signs of weakness on the demand side gradually emerge, the divergence between market optimism and the fundamentals of the real economy is raising increasing caution among analysts.
Goldman Sachs' latest report also noted that while it raised its aluminum price target for the first half of 2026 to $3,150 per ton, it maintains a bearish outlook for the medium to long term, believing that with the release of new production capacity in places like Indonesia, combined with a slowdown in demand growth in sectors such as photovoltaics and automobiles, the global aluminum market is expected to enter a structural surplus by 2026.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b808597-67a0-4da7-825d-412afc9fd6b5.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b808597-67a0-4da7-825d-412afc9fd6b5.png"/>
<h2>Copper: Significant Divergence Between Price and Demand</h2>
Currently, copper prices have once reached a high of $13,247 per ton, mainly supported by expectations of tight global supply, a weak dollar, and the prospect of interest rate cuts by the Federal Reserve. However, Goldman Sachs pointed out on January 28 that its latest market survey shows that procurement activities in downstream industries, from consumer electronics to hardware manufacturing, have significantly contracted, leading to a general decline in orders for processors by 10% to 30%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/32d84d5e-9a0a-4bf9-89d4-eefed77ad568.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/32d84d5e-9a0a-4bf9-89d4-eefed77ad568.png"/>
Particularly noteworthy is that orders for grid construction, a long-term stable pillar of industrial metal consumption, have shown signs of slowing down, which may indicate that broader economic activity is cooling. If this trend continues, it will exert substantial pressure on the currently high metal prices.
<h2>Aluminum: Short-term Upward Revision and Long-term Structural Bearishness</h2>
Aluminum prices have recently reached a new high since April 2022. Although Goldman Sachs has raised its aluminum price target for the first half of 2026 to $3,150 per ton in its latest report, it acknowledges that short-term support comes from low inventories and demand for new energy, but clearly maintains a bearish outlook for the medium to long term.
The core logic is that as new production capacity in places like Indonesia is confirmed to be released, the demand growth in the photovoltaic sector (decrease in aluminum consumption per unit) and the automotive sector (downward adjustment of electric vehicle production and sales growth expectations) will structurally slow down. The global aluminum market is expected to enter a surplus cycle by 2026, with the average price possibly falling to USD 2,400 per ton in 2027. The report also warns that the current aluminum price already contains significant scarcity premium risk.
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The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at their own risk.

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Goldman Sachs has issued a warning regarding the base metals market. Despite the London base metals index rising by about 7% this year, copper demand has shown signs of fatigue, and the growth of orders for grid construction has slowed. Goldman Sachs pointed out that copper prices have significantly diverged from demand, with procurement activities contracting by 10% to 30%. The short-term outlook for aluminum prices has been revised upward to USD 3,150 per ton, but the long-term outlook remains bearish, with expectations that the global aluminum market will enter a phase of structural oversupply

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As base metals surge, Goldman Sachs goes against the trend and remains bearish: copper demand has shown signs of weakness, and aluminum will enter a surplus cycle