How long can the copper bull market last? Goldman Sachs: The high price of 13,000 is unsustainable, and the turning point may occur after the tariffs take effect in the second quarter

Goldman Sachs believes that the recent surge in copper prices is mainly driven by a stockpiling wave and speculative funds triggered by expectations of U.S. tariffs, bringing a temporary "scarcity premium" to the market. Although the bank has raised its price forecast for the first half of 2026, it clearly warns that the current high price of over $13,000 is difficult to sustain and is severely detached from the fundamentals.

According to news from the Wind Trading Desk, Goldman Sachs' Eoin Dinsmore team predicted in a report released on the 8th that it will raise the LME copper price forecast for the first half of 2026 from $11,525 per ton to $12,750 per ton, citing that inventories outside the U.S. are tightening due to capital inflows and supply flowing to the U.S. However, the bank maintains its forecast of $11,200 per ton for the fourth quarter of 2026, indicating that copper prices will face significant downward pressure in the second half of the year.

Copper prices have risen by 22% since the end of 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 capital inflows, adding a "scarcity premium" to copper prices against the backdrop of low overseas inventories, but this upward trend has exceeded the reasonable fundamental level of about $11,400 per ton.

Goldman Sachs believes that the second quarter will be a turning point for market sentiment. It is expected that the U.S. decision on refined copper tariffs will be finalized by then, which not only marks the end of U.S. stockpiling behavior but will also shift the market focus back to the severe global supply surplus in fundamentals. Goldman Sachs has raised its expectation for the global copper market surplus in 2026 from 160,000 tons to 300,000 tons, and as the global supply-demand balance becomes the dominant factor for prices, the tension in markets outside the U.S. will further ease starting in 2027.

Stockpiling Wave Masks Fundamental Surplus

The core logic supporting the recent rise in copper prices is not the traditional supply-demand gap, but rather the flow of funds and inventory transfers. Goldman Sachs points out that the current copper price has exceeded its reasonable fundamental level of about $11,400 per ton. Although the U.S. dollar exchange rate has not provided momentum, speculative funds have forcibly assigned a "scarcity premium" to copper prices against the backdrop of low overseas inventories.

Despite the acceleration of U.S. economic growth and the "high-temperature operation" of macro policies attracting capital inflows, the fundamental data is not optimistic. The U.S. only accounts for 7% of global copper demand, and while consumption of semi-finished copper products is expected to accelerate to 2.4% in 2026, it is insufficient to materially change the global demand landscape. As the momentum of U.S. GDP growth weakens in the second half of 2026, investor interest in copper is also expected to wane.

Uncertainty of Tariff Decisions and Turning Points

Goldman Sachs emphasizes that the timing of the U.S. refined copper tariff decision is a key catalyst for future price trends. Recently, the White House postponed the increase in tariffs on wooden products, indicating that "affordability" remains a focus for the U.S. government as the midterm elections approach. This reduces the likelihood of quickly implementing refined copper tariffs, and Goldman Sachs has lowered the probability of timely implementation from 55% to 45%.

If the tariff decision is delayed or the intensity is less than expected, it will have a bidirectional impact on LME copper prices. On one hand, delaying implementation allows the U.S. to continue stockpiling copper, benefiting short-term prices; on the other hand, if tariffs are ultimately not raised or postponed until 2027, the market will reassess the reality of global supply surplus, posing significant downside risks to prices In addition, the U.S. Department of Defense's direct investment in Korea Zinc's smelting plant project in the United States also suggests a policy path to ensure supply security through investment rather than solely relying on tariffs.

Severe Global Supply Surplus, Speculative Positions Near Peak

Beneath the surface of rising prices driven by speculative funds, the global copper market is facing a supply surplus not seen in years. According to Goldman Sachs data, the global copper market is expected to record a supply surplus of 600,000 tons in 2025, the largest absolute surplus since 2009. Due to high prices suppressing demand and an increase in scrap copper supply, Goldman Sachs has raised its 2026 global supply surplus forecast from the previous 160,000 tons to 300,000 tons.

The financial situation shows that speculative positions are at historically high levels. Goldman Sachs analyzes that while the proportion of speculative long positions held by traders on the CME exchange has not reached extreme levels, it is already in the later stages of this round of rising prices.

Models indicate that for every 1 percentage point increase in speculative net positions, copper prices rise by approximately 0.4%. To push copper prices further up to $14,000, the net long position ratio of managed funds on the CME would need to increase from 24% in late December to about 30%. Although U.S. economic growth and AI spending may continue to provide support in the coming months, this fund-driven rise appears increasingly fragile in the face of global surplus and policy uncertainties