Goldman Sachs on Copper Prices: $10,000 has become the "new bottom line," while $11,000 is the upper limit in the next two years

Goldman Sachs' latest report indicates that copper prices are resetting into a whole new price range. Structural constraints on the supply side, strong demand in key areas (such as power grids, AI, and defense), and potential strategic reserve behaviors are collectively pushing the bottom support level for copper prices up to $10,000 per ton.

For investors, this means that the downside potential for copper prices is very limited, with $10,000 becoming a solid "new bottom line." However, due to a slight oversupply in the market in the short term, and the high prices triggering an increase in scrap copper supply and aluminum substitution effects, there is also a clear $11,000 "ceiling" for copper price increases over the next two years. The market will not experience extreme shortages in the short term, and prices will fluctuate within a high range. Investment decisions need to closely monitor the subtle changes in supply and demand balance, especially the trends in strategic reserves, which will be key variables in absorbing market excess inventory and influencing prices.

Based on this, Goldman Sachs has raised its copper price forecast for 2026 from $10,000 to $10,500 per ton, while maintaining a forecast of $10,750 per ton for 2027.

New Price Range: $10,000 is the Bottom, $11,000 is the Top

Goldman Sachs believes that starting in 2026, copper prices will enter a new trading range of $10,000 to $11,000 per ton. This judgment is based on three core trends: supply constraints, structural demand growth, and strategic reserves.

Although recent mining supply disruptions (such as the shutdown of the Grasberg mine) have led to a 6% decline in global refined copper production from the second quarter of 2025 to the first quarter of 2026, the market is currently still in a slight oversupply situation. Goldman Sachs expects this slight oversupply to continue into 2026, with an expected surplus of 180,000 tons. The real supply gap is not expected to appear until the end of this decade (2029). Therefore, in the next two years, the upside potential for copper prices will be limited to around $11,000.

Supply Side Bottlenecks: Long-term Shortage "Concerns" Support Price Bottom

The $10,000 bottom for copper prices is primarily supported by structural challenges on the supply side.

• Increased Mining Difficulty: As mines go deeper, ore grades decline, and ore hardness increases, capital expenditures (Sustaining Capex) to maintain existing production continue to rise. This limits mining companies' ability to invest in growth capital expenditures.

• Slow Supply Growth: Goldman Sachs predicts that the average annual growth rate of global copper mine supply will only be 1.5% between 2025 and 2030.

• Investment Incentive Prices: Although current prices are sufficient to incentivize low capital expenditure projects in places like China and the Democratic Republic of the Congo, investment in brownfield projects in South America is necessary to balance the market in the latter part of this decade. The price required to initiate these projects is at least $10,500 per ton. This constitutes a solid bottom for copper prices.

Demand and Substitution: Short-term Oversupply "Concerns" Constitute Price Ceiling

Although copper prices have solid bottom support, the $11,000 ceiling is also clear, primarily stemming from two factors:

• Increase in Scrap Copper Supply: High prices will incentivize more scrap copper to enter the market. Goldman Sachs expects that the increase in scrap copper usage will help alleviate market tightness and delay the timing of a global copper market deficit until the end of this decade.

• Accelerated Aluminum Substitution: When copper prices are too high, cyclical industries (such as low-voltage cables, home appliances, and industrial applications) will accelerate their shift to using cheaper aluminum. Goldman Sachs believes that when the copper-to-aluminum price ratio exceeds 4:1 (approximately corresponding to a copper price of $10,200, based on aluminum prices of $2,500-$2,600), the substitution effect will significantly strengthen. This substitution effect suppresses the overall demand growth for copper, thereby limiting the unlimited rise in prices.

Strategic Reserves: The "Safety Valve" for Absorbing Excess Capacity

In the context of a slight oversupply in the current market, strategic reserves may become a key factor in supporting prices. Copper, as a critical strategic material, has limited supply, making it an attractive reserve commodity.

• Low Inventory Levels in China and the U.S.: Compared to oil, China's and the U.S.'s strategic copper inventories are currently low. China relies on imports for 75% of its copper consumption, while nearly 50% of the U.S.'s refined copper demand also needs to be met through imports.

• Potential Reserve Demand: Goldman Sachs estimates that to maintain inventory days, China needs to increase its strategic reserves by about 150,000 tons by 2030. If the U.S. were to follow its cobalt reserve plan and establish a 40-day copper consumption reserve (approximately 175,000 tons), it would cost about $1.8 billion.

• Market Impact: These potential strategic purchases could absorb most of the expected excess in the market, thereby limiting the increase in visible inventories and providing downside protection for exchange prices. However, Goldman Sachs also warns that if strategic reserves fall short of expectations, market oversupply will be directly reflected in inventories, potentially causing prices to drop below $10,000.

Shift in Demand Structure: "Dr. Copper" Transforms into "Colonel Copper"

Copper demand is undergoing a profound shift from cyclical to strategic, transitioning from the "Dr. Copper" that reflects economic cycles to the "Colonel Copper" that serves national security and strategic industries.

• Core Drivers: The power grid and electrical infrastructure will become the main engines of demand growth, contributing over 60% of the increase. Behind this is the urgent need for power systems driven by artificial intelligence (AI), national defense, and energy security. Additionally, electric vehicles, wind energy, and data centers also provide direct growth momentum.

• Slowing Demand Growth: Despite strong strategic demand, the overall growth rate of global refined copper demand will slow from 2.8% in 2025 to an average of 2.1% from 2026 to 2030. This is mainly due to the structural decline in China's construction industry and the demand from cyclical industries being offset by aluminum substitution at high prices