Goldman Warns Copper's Parabolic Breakout Lacks Stability
Copper futures on the London Metal Exchange opened the week with a breakout to new record highs (see report). On Wednesday, we highlighted a Goldman note detailing the "circular melt-up" mechanics driving the move higher. By Thursday, a separate Goldman analyst was cautioning clients that the parabolic move above $11,000/ton is unlikely to last.
At 6:30 ET, LME copper futures hit a fresh record at $11,575/ton, driven by a scramble to move metal into the US warehouses ahead of potential Trump-era import tariffs and a burst of demand from Asia. The combination has intensified global tightening fears amid soaring AI data center buildouts and massive power grid upgrades.
The question now is how long this breakout into record territory can last, and whether the momentum will carry into 2026. To address that question, a team of Goldman analysts led by Aurelia Waltham published an overnight note titled "Copper: Our Favourite Industrial Metal."
"For 2026, we hold a selective outlook for industrial metals. Copper is our 'favourite' industrial metal as constrained mine supply growth and structural demand growth from grid & power infrastructure move the market towards balanced in 2026, from oversupplied in 2025," Waltham told clients.
She continued, "Additionally, higher ex-US premia and conversations with physical traders point to a larger-than-expected reacceleration of copper flows into the US in H1 2026 ahead of a potential tariff, which should further tighten the ex-US market. As a result, we lift our average H1 2026 LME copper price forecast to $10,710 (from $10,415)."
Waltham addressed the ongoing parabolic price surge on the LME this week with a clear note of caution for clients:
That said, we do not expect the market to enter a period of material tightness until the end of the decade. Already-stretched speculative length means that we do not expect the current breakout above $11,000 to be sustained (as was the case in October). Most of the recent price increase has been driven by expectations of future market tightness, rather than current fundamentals (Exhibit 4).
The analyst noted:
While our much smaller 2026 surplus of 160kt moves the market closer to balanced, it means that we do not expect the global copper market to enter a shortage any time soon.
Beyond Waltham's view, super-bull Kostas Bintas of Mercuria recently told Bloomberg, "If the world keeps going like this we will be left without copper cathodes in the rest of the world."
Bintas warned, "Just looking at the facts, mathematically… what is going to happen if all of this continues? There's only one answer: there will be tightness and a higher price."
Li Xuezhi, head of research at Chaos Ternary Futures, a unit of a commodities hedge fund in Shanghai, said, "The rally has just started, we remain bullish on copper prices."
The takeaway: LME copper futures look firmly pointed up and to the right for years to come, but the pace of the move is where some analysts' views sharply diverge.
If you've been putting off those copper gutters or pipes for your next home-improvement project, you should lock them in sooner rather than later.
ZeroHedge Pro subs can read the full note in the usual place.
Tyler Durden
Thu, 12/04/2025 – 07:45