Copper Price Rises Amid Supply Concerns and Goldman Sachs’ Bullish Outlook

Copper Price Climbs on Supply Worries and Production Setbacks

Copper prices surged nearly 2% on Thursday, reaching over $10,800 per tonne on the London Metal Exchange. This increase follows global mine disruptions, causing significant supply concerns in the copper market. Three-month contracts on the COMEX gained 1.9%, rising to $5.10 per lb., or $11,250 per tonne. The price rally began in August, fueled by production setbacks at some of the world’s largest copper mines.

Global supply chain disruptions, including incidents at Chile’s El Teniente and Indonesia’s Grasberg mines, have contributed to the price hike. Copper, essential for renewable energy, electronics, and construction, has risen more than 20% this year. Additionally, Chile’s Antofagasta, a major copper producer, issued a production outlook that missed analysts’ expectations, raising concerns about future supply.

Goldman Sachs Bullish on Copper Prices

Goldman Sachs has a bullish near-term outlook for copper prices. The bank expects copper to potentially test all-time highs in the coming months. It points to feedback from traders during the recent LME Week conference. Analysts believe that once prices breach $10,900 per tonne, additional buying pressure from investors will follow.

The boost to copper prices is also due to the arbitrage opportunity created by US import tariffs. These tariffs led to a record high of $5.732 per lb. for New York copper futures in July. U.S. futures continue to trade at a premium over London prices, signaling a flow of metal into the U.S. market. Goldman expects this to tighten copper markets outside the U.S. and potentially drive further price increases.

Supply Concerns Amplified by Zinc Market Squeeze

As copper prices rise, zinc buyers are facing a historic squeeze on the London Metal Exchange (LME) due to dwindling inventories. Goldman Sachs forecasts that zinc shipments from China will replenish global reserves. While China has a surplus, other regions remain in deficit, potentially leading to further imbalances.

SuperMetalPrice Commentary:

Copper’s price surge reflects broader supply concerns within the global metals market. As demand for copper stays strong, especially in renewable energy and electronics, the price may continue to rise. However, the potential for volatility remains high due to geopolitical tensions, supply chain disruptions, and macroeconomic conditions. Investors should monitor global production levels and market trends closely to navigate these fluctuations.