(Dec 4): Goldman Sachs Group Inc injected some caution into the debate over copper’s prospects, saying its surge past US$11,000 ($14,262) a tonne will prove short-lived, as there’s still more than enough metal to meet global demand.
“Most of the recent copper price increase is based on expectation of future market tightness, rather than current fundamentals,” the bank’s analysts, including Aurelia Waltham, wrote in a note. “We do not expect the current breakout above US$11,000 to be sustained.”
Copper marched to a record of US$11,540 a tonne on the London Metal Exchange on Wednesday, fuelled by worries of a global supply squeeze as the metal is rushed to the US before tariffs are imposed. Trading house Mercuria Energy Group Ltd. stoked that trade last week with a warning of “extreme” supply dislocations.
While Goldman raised its forecast for copper in the first half of next year and said the US tariff trade would support prices, the bank suggested “critically low” inventories outside America could be avoided via higher regional premiums and tighter LME spreads. Demand will fall about half a million tonnes short of supply this year, and there won’t be a copper shortage until 2029, it said.
“While our much smaller 2026 surplus of 160,000 tonnes moves the market closer to balanced, it means that we do not expect the global copper market to enter a shortage any time soon,” the analysts wrote. Prices will be “constricted” in a range between US$10,000 and US$11,000 a tonne in 2026, they said.
Copper edged higher on the LME on Thursday, rising 0.1% to $11,498 a tonne by 1:40pm in Singapore, to extend its gain for this year to 31%. Mining stocks in Asia-Pacific followed the metal higher, with Hong Kong’s CMOC Group Ltd up 6% and Australian-listed Capstone Copper rising as much as 8.2%, among others.
See also: Copper extends record-breaking run as Citi joins bullish chorus
“The rally has just started, we remain bullish on copper prices,” said Li Xuezhi, head of research at Chaos Ternary Futures, a unit of a commodities hedge fund in Shanghai. A huge withdrawal of metal from LME warehouses on Wednesday “fuelled immediate worries about a supply squeeze,” he said.
Still, copper has long been the subject of bold forecasts that have fallen short of reality. And while a series of outages at major mines through 2026 has piled pressure on supply, the world’s appetite for copper has also slowed more recently, despite obvious bright spots like green technologies.
Activity in the copper’s pivotal China market in particular has plunged in recent months. Goldman said it’s expecting a slump in Chinese consumption of nearly 8% year-on-year in the fourth quarter. Next year should see growth of 2.8%, it said.
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