By Jules Rimmer
Goldman Sachs’ base metals team forecasts a growing surplus and an 18% drop in the copper price by the end of 2026
Copper’s rally is encouraging manufacturers in some industries to switch to alternative metals such as aluminum and decrease copper use in electric vehicles.
The price of copper has rallied 23% since November, punching through $13,000 per metric ton on the London Metal Exchange. According to Goldman Sachs, this has been driven largely by speculative inflows. Fundamentals in the sector, however, have been easing in recent months and Goldman Sachs said the bulk of the rally in copper has already occurred. Its base-metals research team predicts the LME copper price will correct to $11,000 per ton by December 2026.
They are not alone. A sector note published Thursday by U.K. brokerage outfit Peel Hunt also warns a repeat of 2025’s 40% boom in copper (HG00) is unlikely. Though they raised their price estimates by 22%, their forecast average for 2026 is just $11,750 and their long-run estimate is only $10,000.
The Goldman team, led by Eoin Dinsmore, noted that more than $30 billion flowed into base metal markets last year – the largest on record for speculative inflows – and the destination for more than half of this was copper. For Dinsmore, this, rather than a weak dollar DXY, supply tightness and Chinese growth expectations, was the chief driver of copper’s rally.
Goldman Sachs attributed much of last year’s gains in copper to speculative inflows
Copper has also managed to attract spillover buying from the so-called debasement trade, as well as strategic importance amid rising geopolitical tensions.
Goldman recently increased its forecast for a copper surplus in 2026 from 160,000 metric tons to 300,000 tons as the record-breaking prices have cooled demand and stimulated a higher supply of scrap. Global inventories are building ahead of restocking trends before the Lunar New Year holiday. The report, published Thursday, notes some downside risks to copper demand growth.
Goldman noted that demand from electric vehicle manufacturers (roughly a third of the global demand for copper extending out to 2030) is decreasing as the copper intensity of newer models is falling. High prices may also encourage the use of aluminum in wiring rather than copper – and this trend for switching to cheaper alternatives can be observed in several other manufacturing industries.
Concerns about the imposition of tariffs on copper by the Trump administration led to stockpiling, significantly above historic averages, in the U.S. in 2025. That generated a significant premium for the metal on the Commodity Exchange, part of the Chicago Mercantile Exchange.
Goldman said this COMEX premium will fade in months to come as “the Trump administration is no longer relying on tariffs to enhance U.S. security of supply in metals.”
-Jules Rimmer
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01-15-26 0701ET
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