After reaching a new high of 11,000, Goldman Sachs issued a warning on copper prices: a supply surplus of 500,000 tons within the year, and a possible range-bound fluctuation next year
Goldman Sachs warns that the surge in copper prices is difficult to sustain, predicting a supply surplus of 500,000 tons this year, with copper prices oscillating between $10,000 and $11,000 in 2026. The recent increase is mainly based on expectations of future market shortages rather than current fundamentals. Goldman Sachs has raised its forecast for the average LME copper price in the first half of 2026 to $10,710, influenced by U.S. tariff policies. The long-term supply-demand structure for copper is tightening, but the short-term market is oversupplied
Goldman Sachs has warned that copper prices have surged above $11,000 per ton, believing that this upward trend is difficult to sustain as global copper supply remains sufficient to meet demand. It is expected that copper prices will fluctuate between $10,000 and $11,000 in 2026.
According to the Chase Wind Trading Desk, in the latest research report, Goldman Sachs' analyst team led by Aurelia Waltham stated, the recent rise in copper prices is primarily based on expectations of future market shortages rather than current fundamental support. The bank expects that this year, copper supply will exceed demand by about 500,000 tons, and a copper shortage will not occur until 2029.
Goldman Sachs has raised its forecast for the average copper price on the London Metal Exchange (LME) in the first half of 2026 to $10,710, reflecting the impact of potential U.S. tariff policies driving copper inflows, but a slight correction may occur in the second half. Additionally, the "extremely low" inventory issues outside the U.S. can be alleviated through higher regional premiums and tighter LME price spreads.
LME copper prices reached a historic high of $11,540 per ton on Wednesday, mainly due to market concerns about a surge in metal supplies before U.S. tariffs, causing global supply tightness. On Thursday, mining stocks in the Asia-Pacific region rose, with Luoyang Molybdenum A shares increasing by 6% at one point, and Capstone Copper's Australian stocks rising by 8.2%.
Copper is still viewed by Goldman Sachs as the "preferred" industrial metal, driven by global investments in power grids and energy infrastructure, with a tightening long-term supply-demand structure, but the market remains slightly oversupplied in the short term.
Limited Support from Supply and Demand Fundamentals
Since the beginning of this year, copper prices have been boosted by expectations of interest rate cuts from the Federal Reserve, a weaker dollar, and expectations of economic recovery in China, combined with supply disruptions and policy changes (such as U.S. tariffs and the AI capital expenditure boom), leading to a significant influx of speculative funds, with net long positions in copper speculation nearing historical highs.
According to Goldman Sachs' analysis, the recent copper price breakthrough is driven by market expectations of future supply tightness rather than current actual demand or inventory changes. Last week, trader Mercuria Energy Group warned of a potential "extreme" supply mismatch, further heightening market sentiment. This warning intensified concerns about metal rushes before U.S. tariffs are imposed.
Goldman Sachs expects that the global copper market will experience a surplus of 500,000 tons in 2025, mainly due to weak demand in some Asian countries in the fourth quarter, but the surplus will narrow to 160,000 tons in 2026, with the market gradually moving towards balance, although still insufficient to constitute a real supply shortage.
Goldman Sachs pointed out that in the first half of 2026, copper prices will receive additional support from the U.S. market. As the U.S. may announce at least a 25% tariff on refined copper imports by mid-2026, traders have locked in high premium procurement agreements for the entire year in advance, accelerating copper inflows into the U.S. and tightening supply in markets outside the U.S Recently, LME copper prices have risen due to inventory cancellations, releasing metal flows to the United States. Goldman Sachs has raised its forecast for the average LME copper price in the first half of 2026 to $10,710, but expects a slight correction in prices in the second half after tariffs are implemented.
It is worth noting that despite widespread market concerns about "extremely low" inventory levels outside the United States, Goldman Sachs believes the severity of this issue has been overstated.
Analysts at the firm stated that regional inventory tightness can be alleviated through market mechanisms, including increasing regional premiums and tightening the spread structure of London Metal Exchange futures contracts. These adjustments will help rebalance the global copper supply distribution.
Copper Remains the Preferred Choice
Although short-term supply is ample, in the long term, global investments in power grids and energy infrastructure, especially in strategic areas such as AI and defense, will be sufficient to support continued growth in copper demand.
Therefore, Goldman Sachs maintains its "preferred" rating on copper and recommends investors go long on the December 2027 LME copper contract. It is expected that copper prices will fluctuate between $10,000 and $11,000 in 2026, with $10,000 serving as a solid price floor, reflecting resource constraints and structural demand growth.
In the short term, influenced by expectations of U.S. tariffs and inventory flows, copper prices may experience temporary upward movement, but it will be difficult to sustain after breaking through the range. In the long term, the supply-demand gap is expected to gradually emerge after 2029, at which point copper prices are likely to rise further. Goldman Sachs predicts that LME copper prices will reach $15,000 per ton by 2035 (equivalent to $11,500 per ton in 2025 dollars).
On Thursday, LME copper prices continued to rise, with a cumulative increase of 31% this year. Aluminum prices also continued to strengthen, likely reaching the highest closing price since 2022.
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