Goldman Sachs on Copper Prices: $10,000 Has Become the "New Floor," $11,000 Is the Ceiling for the Next Two Years

``` Goldman Sachs’ latest report indicates that copper prices are resetting into an entirely new price range. Structural supply constraints, strong demand from key sectors (such as the power grid, AI, and defense), and potential strategic stockpiling have together pushed copper’s support floor up to $10,000/ton. For investors, this means the downside room for copper prices is now very limited, with $10,000 becoming a solid “new bottom line.” However, as the market is still in mild surplus in the short term, and high prices will trigger increases in scrap copper supply and aluminum substitution, there is also a clear $11,000 “ceiling” for copper prices over the next two years. There will not be an extreme shortage in the short term and prices will fluctuate within a high range. Investment decisions require close attention to the delicate changes in supply-demand balance, especially regarding strategic stockpiling, which will be a key variable in absorbing excess market inventory and affecting prices. On this basis, Goldman Sachs has raised its 2026 copper price forecast from $10,000 to $10,500/ton, while maintaining the 2027 forecast at $10,750/ton. New Price Range: $10,000 Bottom, $11,000 Ceiling Goldman Sachs believes that starting from 2026, copper prices will enter a new $10,000–$11,000/ton trading range. This assessment is based on three core trends: supply constraints, structural demand growth, and strategic stockpiling. Despite recent supply disruptions at mines (such as the Grasberg mine shutdown) leading to a 6% decline in global refined copper production from Q2 2025 to Q1 2026, the market is currently still in a mild surplus. Goldman expects this mild surplus to persist in 2026, with a projected excess of 180,000 tons. The real supply deficit is expected to emerge near the end of the decade (2029). Therefore, in the next two years, copper’s upside is capped at around $11,000. Supply Bottlenecks: The “Long-term Concern” Supporting the Price Floor Copper’s $10,000 floor is mainly supported by structural challenges on the supply side. - Increasing mining difficulty: As mines are dug deeper, ore grades decline, and ore hardness increases, maintaining current production requires climbing sustaining capex. This constrains miners’ ability for expansionary capex. - Slow supply growth: Goldman forecasts that between 2025 and 2030, the annual average growth rate of global copper mine supply will be only 1.5%. - Incentive pricing for investment: While current prices suffice to incentivize low-capex projects in China and Congo (DRC), to balance the market later this decade, investment in South American brownfield projects is essential. Launching these projects requires prices of at least $10,500/ton. This forms a solid floor for copper prices. Demand & Substitution: The “Short-term Worry” that Caps the Price Ceiling While copper has a solid floor, the $11,000 ceiling is also well-defined, mainly due to two factors: - Increased scrap copper supply: High prices incentivize more scrap copper to enter the market. Goldman expects the increase in scrap usage to help ease market tightness and delay the emergence of a global copper shortfall to the end of the decade. - Accelerated substitution by aluminum: When copper prices are too high, cyclical industries (such as low-voltage cables, home appliances, and industrial applications) accelerate the switch to lower-cost aluminum. Goldman notes that when the copper-to-aluminum price ratio exceeds 4:1 (equivalent to copper at $10,200 and aluminum at $2,500–2,600), the substitution effect is significantly enhanced. This substitution suppresses the growth of total copper demand, curbing limitless price increases. Strategic Stockpiling: The “Safety Valve” Absorbing Excess Capacity In the current context of a slight market surplus, strategic stockpiling could become a key support for prices. As a critical strategic resource, copper’s constrained supply makes it a highly attractive commodity for reserves. - Low inventory levels in China and the US: Compared to oil, China and the US currently have low copper strategic reserves. China relies on imports for 75% of copper consumption, while nearly 50% of US refined copper demand also relies on imports. - Potential reserve demand: Goldman estimates that to maintain inventory days, China will need to add around 150,000 tons of strategic copper reserves by 2030. If the US were to follow its cobalt reserve scheme and establish a 40-day copper consumption reserve (about 175,000 tons), it would cost roughly $1.8 billion. - Market impact: Such strategic purchases could absorb most of the surplus expected by the market, limiting visible inventory growth and providing downside protection for exchange prices. However, Goldman also cautions that if strategic stockpiling falls short of expectations, the surplus will directly appear in inventories, which could push prices below $10,000. Demand Structure Transformation: “Dr. Copper” Becomes “Colonel Copper” Copper demand is undergoing a profound shift from cyclical to strategic—that is, from reacting to the economic cycle as “Dr. Copper” to serving national security and strategic industries as “Colonel Copper.” - Core drivers: Power grid and electric infrastructure will become the main engines for demand growth, contributing over 60% of the increase. This is driven by urgent demand for electricity systems from AI, defense, and energy security. Additionally, electric vehicles, wind energy, and data centers provide direct growth momentum. - Slower demand growth: Despite strong strategic demand, overall growth in global refined copper demand will slow from 2.8% in 2025 to an average of 2.1% per year in 2026–2030. This is mainly due to the structural decline in China’s construction sector and aluminum substitution offsetting cyclical industry demand at high prices. Risk Warning and Disclaimer The market has risks; investment must be cautious. This article does not constitute personal investment advice and has not considered any individual user’s specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their individual circumstances. Investment based on this is at your own risk. ```