Copper prices hit a record high, Goldman Sachs: Has the global market entered a "cyclical melt-up" phase?

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Copper prices are undergoing a price restructuring driven by cross-market arbitrage, due to the combined effects of U.S. tariff expectations and global structural supply tightness. Goldman Sachs commodity experts warn that arbitrage trading based on tariff expectations is forming a self-reinforcing cycle of "inventory draining – widening spreads – accelerated hoarding," pushing global copper prices into historical high ranges.

After breaking out of the Thanksgiving consolidation range, London Metal Exchange (LME) copper futures continued to move upward, hitting new highs. Specific data shows LME copper prices once rose nearly 1% to $11,294.50 per ton; U.S. New York Commodity Exchange (Comex) copper futures saw gains expand to 1.6%. Traders, seeking to avoid potential Trump-era tariffs, are racing to ship copper into the U.S., continually driving up the price spread between the U.S. and Europe.

This arbitrage activity has further exacerbated an already fragile supply-demand situation. On one hand, global mine production is frequently disrupted; on the other, U.S. import demand is surging, continuously draining spot inventories from other regions. Since the start of this year, LME copper prices have gained 30%. Mercuria senior trader Kostas Bintas warns that if this trend continues, markets outside the U.S.—especially Asia—may soon face a substantial shortage of copper cathodes, which could trigger a new phase of accelerated price increases.

Goldman Sachs Experts Explain The "Cyclical Uptrend" Mechanism

Goldman Sachs commodity expert James McGeoch defines the current market dynamics as a "cyclical uptrend." He notes that London Metal Exchange (LME) inventories continue to tighten, coupled with active arbitrage trading on the U.S. COMEX market, jointly strengthening the LME forward discount structure. This discount structure further stimulates arbitrage activity on the COMEX market, forming a self-reinforcing cycle of "inventory tightening – deepening discounts – increasing arbitrage." He says:

I've been watching LME copper prices; the $11,100 level has been tested three times now, and it feels like a spring ready to launch.

McGeoch further analyzes that the market has long been eyeing a potential supply shortage in the first half of 2026. At present, several major copper mines are facing production challenges, including restricted supply at Grasberg, falling inventories at Kakalua, operational friction at Codelco, weak output at Collahuasi, and a persistently low mining rate at the QB project.

Against this backdrop, the U.S. is attracting global inventories back as "strategic reserves" based on expectations of tariff policies. Dealers are supporting these flows through their balance sheets, which objectively intensifies spot market tightness in other regions around the world.

The U.S. Becomes The Dominant Force In The Copper Market

Nick Snowdon, head of metals and mining research at Mercuria, says the United States is now the marginal price setter in the copper market. His colleague Bintas predicted in March that driven by U.S. import demand, copper prices could reach $12,000–$13,000 per ton.

Bintas stated that if copper prices surge to $12,000 or $15,000, Shanghai Futures Exchange prices may lag behind. He forecasts that by the first quarter of 2026, copper shipments to the U.S. may exceed 500,000 tons. He particularly emphasizes: "When China's market reopens after the Spring Festival holiday, it could face a severe shortage of copper cathodes."

Goldman Sachs commodity expert James McGeoch points out that almost no one foresaw the U.S. dominating the copper market structure a year ago. Whether by coincidence or strategic design, the U.S. now holds the key cards. He stresses that commodities are physical assets; the trading logic isn't just in Excel models, but always involves the complex game of actual supply and demand.

Long-Term Structural Demand Supports Prices

Investors rushing into the copper market not only seek the lucrative U.S. arbitrage trade, but are also betting on the long-term structural demand driven by the "next AI computing power wave" and global grid upgrades.

Jeff Currie, who led commodity research at Goldman Sachs for nearly 30 years and is now chief strategy officer for Carlyle Group’s energy pathway team, said earlier this year that copper is "the most compelling trade I've seen in my 30-year trading career."

The current supply-demand imbalance is expected to persist in the coming quarters, especially as major global copper mine supply remains constrained and U.S. infrastructure demand stays strong, further tightening the copper market.

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