Copper prices have risen far beyond expectations! Goldman Sachs raises its first-half target price but still insists on a "pullback after US tariffs."

Copper prices have risen far beyond expectations! Goldman Sachs raises its first-half target price but still insists on a "pullback after US tariffs."

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The frenzied rise in copper prices has forced Goldman Sachs to reassess its short-term forecasts, but the Wall Street giant still believes that once US tariffs take effect, fundamental supply-demand forces will once again come into play.

According to trading desk news, the latest research report released by Goldman Sachs Commodities Research analyst team led by Eoin Dinsmore on January 8 shows that copper prices have experienced dramatic volatility over the past month, soaring from less than $11,000/ton at the end of November to a high of $13,387 on January 6, an increase of 22%. Facing this trend, Goldman Sachs admits that prices have exceeded its perceived fair fundamental level of about $11,400/ton.

However, this “overheating” is not without reason. Goldman Sachs points out that a massive influx of investor funds as well as low inventory outside the US (ex-US) have added a notable “scarcity premium” to copper prices. More importantly, market expectations that the US will impose tariffs on copper have led to metal being absorbed in large amounts into the US market for stockpiling. On this basis, Goldman Sachs decided to raise its LME copper price forecast for the first half of 2026 from its previous $11,525/ton to $12,750/ton.

But investors should not be blinded by the current boom. Goldman Sachs makes it clear that it does not see prices above $13,000 as sustainable. The bank maintains its Q4 2026 forecast of $11,200/ton, and expects a price correction in the second quarter.

Dual Drivers: “Overheated” Macro Narrative and the AI Boom

Goldman Sachs analysis points out three major themes driving this round of copper price increases:

  1. Tight signals from the spot market: At the beginning of December, requests to withdraw metal from LME warehouses surged, confirming tight supply outside the US market.
  2. AI and data center frenzy: Despite some volatility in mid-December, the ongoing construction boom for AI data centers continues to attract capital inflows into the copper market.
  3. “Economic overheating” macro narrative: This is the final boost to the rally. As markets expect accelerated US economic growth and looser monetary and fiscal policies, expectations of a cyclical demand rebound have driven copper and broader risk assets to rally strongly at the start of the new year.

This macro narrative even masks fundamental weakness. Goldman Sachs equity strategy team points out that accelerated US economic growth should lift cyclical sectors in the stock market, and this sentiment has spilled over into the copper market.

The End of Stockpiling Comes When Tariffs Land

Goldman Sachs’ core view is: The current rally is built on the specific behavior of “US stockpiling”.

Analysts believe the second quarter will be a key turning point. At that time, the US may announce its decision on refined copper tariffs. Once this decision is clarified, it will mark the end of US stockpiling, and the market focus will return to the global surplus.

According to CCTV news, on July 30 last year, President Trump signed a proclamation, announcing that from August 1, 50% tariffs would be imposed only on copper pipes, copper wires, cables and other semi-finished and copper-intensive products, but exempting refined copper—including cathode copper and anode copper, which are the mainstream in international trade. However, the outlook for refined copper import tariffs has not completely vanished. The US Department of Commerce recommended delaying implementation, to impose a 15% tariff starting in 2027, and increase it to 30% by 2028. Trump has instructed the department to provide an updated report on the US copper market by the end of June 2026.

It is worth noting that Goldman Sachs has adjusted its expectations on the tariffs. In view of the recent White House decision to delay higher tariffs on lumber products (citing affordability concerns), Goldman Sachs believes the possibility of refined copper tariffs being delayed or not implemented is increasing.

  • Base case scenario (45% probability): Announce a 15% tariff in mid-2026, but delay implementation until 2027.
  • Delay scenario (40% probability): The tariff decision is pushed directly to 2027.

If the latter scenario happens—i.e. tariff delay—it is bearish for LME copper prices, because it would mean no tariff threat and the market refocusing on plentiful supply globally.

The "Hidden Worry" of Global Surplus

Beneath the surface boom, the fundamental backdrop for the global copper market is actually rather fragile.

Data shows that in 2025, the global copper market will record a surplus of 600,000 tons (600kt), the largest absolute surplus since 2009. For 2026, Goldman Sachs has raised its global surplus estimate from the previous 160,000 tons to 300,000 tons.

Additionally, as the attractiveness of US import arbitrage wanes, Goldman has revised its forecast for US stockpiling volume in 2026 from 750,000 tons to 600,000 tons.

Speculative Positions Hit All-Time Highs, But This May Not Be the Top

For the market, the most dangerous signal comes from position structure.

Goldman Sachs warns that current speculative positions are already at historical highs. This usually means the rally is in its late stages. However, until the “US economic growth, AI spending, and US stockpiling” pillars collapse, prices may still find support.

From historical data, although positioning is at record levels, managed money long positions in CME copper futures as a share of all open interest have not yet reached extremes. To push copper prices up to $14,000/ton, this ratio would need to rise from 24% at the end of December to around 30%. Though this is not Goldman Sachs’ base case forecast, it illustrates the shape of what a speculative mania top might look like.

 

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