Three major drivers push up copper prices! Goldman Sachs and Citigroup are optimistic that prices may reach $15,000 within the year.

Mining giants have successively halted production, the United States is aggressively hoarding, and AI and new energy sources continue to "consume copper" the global copper market is experiencing unprecedented changes in supply and demand. In response to this situation, Goldman Sachs Group, Inc. and Citigroup recently significantly increased their copper price forecasts, adding fuel to the nearly 10% increase in copper prices so far this year. In a report, Goldman Sachs Group, Inc. raised its forecast for LME copper prices by over 10% to $13,735 per ton by the end of 2026, up from the previous $12,465 per ton, and also raised the average price forecast for the full year of 2027 from $12,150 to $13,800 per ton. Citigroup, on the other hand, was more aggressive, raising its short-term copper price forecast from $13,000 per ton to $14,500 per ton, with a target price of up to $15,000 per ton in the next 6 to 12 months indicating that there is still significant upward potential for copper prices within the year. Three main drivers boosting copper prices DRIVE one: Large-scale mine stoppages leading to a sharp increase in supply gap Goldman Sachs Group, Inc.'s main basis for this upward revision is that the deterioration of mine supplies has far exceeded expectations. Since the beginning of this year, two major copper mines globally have suffered heavy blows Indonesia's Grasberg copper mine and the Congo's (Kinshasa) Kamoa-Kakula copper mine have not been able to fully recover production since the production accidents in 2025, with the latest estimation that they will not return to normal levels until 2028. As a result of this, Goldman Sachs Group, Inc. has significantly reduced its forecast for global mine supply by 350,000 tons in 2026, equivalent to about 1.5% of the total global mine supply. From the perspective of production ramp-up progress, Indonesia's Freeport-McMoRan copper and gold subsidiary stated that the current Grasberg mine is only maintaining 40% to 50% of its normal production capacity, with the original target of reaching 85% production capacity by mid-2026 being delayed, and the latest plan revised to resume 65% in the second half of 2026, 80% by mid-2027, until full capacity operation is achieved in early 2028. The Kamoa-Kakula copper mine faces similar challenges in resuming production. The pressure on the supply side is far from over. Copper concentrate treatment charges (TCs) have been continuously in historically unprecedented negative value territory, with the long-term benchmark for copper concentrate processing fees in 2026 falling to zero, and spot processing fees dropping to as low as -$70 per ton, meaning that smelting companies not only fail to earn processing income, but also need to pay fees to mining companies to obtain raw materials. Last week, China's imported copper concentrate processing fee index further dropped to -$110.40 per ton, hitting a new low. Meanwhile, due to the impact of the situation in the Middle East, the supply of key sulfur raw materials for copper smelting has been disrupted, further exacerbating the tight situation in the copper spot market. Scrap copper, as a buffer on the supply side, has also failed to play its role domestic scrap copper production in China in the first few months of this year has decreased by 12% year-on-year. The multiple "collapses" on the supply side have led to a sharp deterioration in market expectations for the supply-demand gap outside the United States. DRIVE two: The United States is hoarding copper, draining the global spot market In addition, concerns about the United States possibly imposing tariffs on refined copper continue to escalate, driving importers to stock up ahead of policy implementation, leading to a large amount of copper being shipped from around the world to the United States. Goldman Sachs Group, Inc. analysts pointed out that U.S. copper imports in the first half of 2026 far exceeded expectations, and it is expected that the accumulated U.S. copper inventories for the year will be raised from 550,000 tons to 900,000 tons. Once this copper enters U.S. warehouses, it is "locked up" and no longer flows to international markets such as the LME, and the London copper price reflects the price after further compression of global remaining supplies. Therefore, Goldman Sachs Group, Inc. sharply raised the supply gap forecast for the copper market outside the United States from the previous 60,000 tons to 640,000 tons, and the 2027 gap forecast from 40,000 tons to 170,000 tons. It is understood that on May 22, more than 50,000 tons of copper were withdrawn from warehouses on the LME in a single day, the largest concentrated withdrawal since 2013, and all copper was destined for the United States. At the same time, the COMEX copper price was temporarily more than $500 per ton higher than the LME price, prompting global traders to accelerate the shipment of copper from South America, Europe, and Asia to the United States. The U.S. Department of Commerce is required to submit a recommendation to the President by June 30 on whether to impose a 15% tariff on refined copper from next year. Goldman Sachs Group, Inc. assumes in its base-case scenario that the United States will once again postpone imposing any tariffs on refined copper, but the expectation of "tariffs could be imposed at any time" is enough to drive continued precautionary behavior. DRIVE three: AI and new energy sources build a structural demand stronghold Reduced production and hoarding in the United States constitute a dual squeeze on the supply side, while on the demand side, two major structural forces cannot be ignored AI data centers and energy transformation are building a solid "copper demand stronghold." According to industry estimates, the copper consumption of every megawatt of an AI data center is about 27 to 33 tons, more than double that of traditional data centers. The copper usage of a pure electric vehicle is about 83 kilograms, nearly four times that of a traditional fuel-powered vehicle. It has been predicted that by 2030, the demand for copper related to AI and data centers could reach 1 million tons, equivalent to the annual output of a medium-sized copper-producing country. In the Chinese market, the copper demand for new energy vehicles is expected to reach 1.84 million tons in 2026, and is expected to exceed 2 million tons in 2027; the global copper consumption for data centers in 2026 is expected to reach 740,000 tons, and is forecasted to reach 1.3 million tons by 2028. Citigroup also pointed out in its research report that the demand for energy transformation and AI continues to be strong, with an estimated global copper supply gap of 360,000 tons in 2027. Several institutions predict that global copper consumption growth in 2026 will be over 3.4%, with the supply-demand balance continuing to tighten. Risk appetite and tariff variables Despite the bullish prospects, the market still faces significant uncertainties. Goldman Sachs Group, Inc. in particular noted that if global risk appetite significantly declines and speculative funds withdraw, copper prices could fall to around $12,600 per ton; and if the United States clearly imposes tariffs on copper, copper prices could rise to over $14,000 per ton in the second half of 2026. Citigroup, on the other hand, believes that concerns about the U.S. imposing tariffs on copper will continue to support copper prices at least until the review deadline at the end of June. However, if the market no longer factors in tariff risk premium after June, the uncertainty of tariff policy may turn into a bearish factor. However, with the basic fundamentals of the physical market improving and the possibility of the Strait of Hormuz reopening in the summer, these two factors are expected to offset the related negative impacts.