How much longer can the copper bull market last? Goldman Sachs: The high price of 13,000 is unsustainable; the turning point may come after tariffs are implemented in the second quarter.

Goldman Sachs believes that the recent surge in copper prices has mainly been driven by a wave of stockpiling sparked by expectations of US tariffs and by speculative capital, bringing a temporary “scarcity premium” to the market. Although the bank has raised its price forecast for the first half of 2026, it warned that the current price above $13,000 is unsustainable and severely deviates from fundamentals.

According to Chasewind Trading Desk, the Goldman Sachs team led by Eoin Dinsmore predicted in a report released on the 8th, raising its forecast for LME copper prices in the first half of 2026 from $11,525 per ton to $12,750 per ton, citing tightening inventories outside the US due to capital inflows and supply shifting toward the US. However, the bank maintained its forecast for Q4 2026 at $11,200 per ton, suggesting significant correction pressure for copper prices in the second half of the year.

Copper prices have risen by 22% since late November last year, reaching a high of $13,387 on January 6. Goldman Sachs analysis shows that the current high prices are mainly driven by speculative inflows, adding a “scarcity premium” against the backdrop of low overseas inventories, but this rally has already exceeded the fair fundamental level of around $11,400 per ton.

Goldman Sachs believes that Q2 will be a turning point for market sentiment. It expects that by then, the US decision on refined copper tariffs will be finalized, marking the end of US copper stockpiling and prompting market focus to return to the global fundamentals of severe supply surplus. Goldman has raised its forecast for global copper market surplus in 2026 from 160,000 tons to 300,000 tons, and with global supply-demand balance again becoming the main price driver, market tightness outside the US will further ease starting from 2027.

Stockpiling Wave Masks Surplus Fundamentals

The core logic supporting the recent copper price rally is not the traditional supply-demand gap but rather trends in capital flow and inventory shifts. Goldman Sachs points out that the current copper price has exceeded its reasonable fundamental level of around $11,400 per ton. While the US dollar exchange rate hasn’t been a catalyst, speculative capital under the backdrop of low overseas inventories has forcibly granted copper a “scarcity premium.”

Although accelerated US economic growth and “hot-running” macro policies have attracted funds, fundamental data is not optimistic. The US accounts for only 7% of global copper demand; although consumption of semi-finished copper products is expected to accelerate to 2.4% in 2026, this is not enough to meaningfully change the global demand picture. As US GDP growth momentum weakens in the second half of 2026, investors’ interest in copper is expected to fade accordingly.

Uncertainty of Tariff Decisions and Market Turning Points

Goldman Sachs emphasizes that the timing of US refined copper tariff decisions is a key catalyst for future price trends. Recently, the White House postponed an increase in tariffs on wood products, indicating that “affordability” remains a key focus for the US government with midterm elections approaching. This has reduced the likelihood of a rapid implementation of refined copper tariffs, and Goldman has lowered the probability of tariffs being implemented on schedule from 55% to 45%.

If the tariff decision is delayed or weaker than expected, it will have a two-sided impact on LME copper prices. On one hand, delayed implementation allows the US to continue stockpiling copper, which is favorable for short-term prices. On the other hand, if tariffs aren’t raised or are delayed until 2027, the market will reconsider the reality of the global supply surplus, which is a major bearish factor for prices. Additionally, direct investment by the US Department of Defense in Korea Zinc’s US smelting plant project also suggests a policy path of ensuring supply security through investment rather than tariffs alone.

Severe Global Supply Surplus, Speculative Positions Near Peak

Beneath the surface of prices driven by speculative funds, the global copper market faces its biggest supply surplus in years. According to Goldman Sachs data, the global copper market will see a surplus of 600,000 tons in 2025, the largest absolute surplus since 2009. Due to high prices suppressing demand and increased supply of scrap copper, Goldman raised its forecast for global supply surplus in 2026 from 160,000 tons to 300,000 tons.

From the capital perspective, speculative positions are at historic highs. Goldman Sachs analysis suggests that while the ratio of speculative longs to total positions at the CME has not reached extreme levels, it is in the later stages of this rally.

The model shows that for every 1 percentage point increase in net speculative positions, copper prices rise by about 0.4% on average. To push copper prices further to $14,000, net long managed money positions on CME would need to rise from 24% in late December to about 30%. Although US economic growth and AI spending may continue supporting prices in the coming months, this rally driven by capital appears increasingly fragile in the face of global surplus and policy uncertainties.

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The above content is from Chasewind Trading Desk.

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