Goldman Sachs sees new all-time high for copper price by mid-year
After a brief but glorious spike above $5 a pound, or $11,000 a ton a month ago, copper prices have retreated, with New York futures trading either side of the bar of 4.70 dollars per pound (10,362 dollars per ton).
The intraday record set on March 7 came on the heels of historically low global inventories of the flagship metal and in a research report on Thursday, Goldman Sachs said copper was “sleepwalking towards a stock-out”.
This isn’t the first such warning from Goldman, which is the most bullish investment bank on the direction of copper prices by a comfortable margin.
In February, Goldman signaled a “shortage episode” by the end of the year, with global stocks falling to just over 200,000 tons, barely enough to cover three days of global consumption.
In Thursday’s report, Goldman points to “an extreme fundamental shift” for the metal, as for the first time in a decade, stocks fell through March “instead of rising during what is the main phase. seasonal surplus of this metal”.
Analysts doubled the expected refined metal deficit for this year from previous estimates at 374,000 tonnes and also significantly increased projected deficits over the next two years.
“With no apparent adjustments already underway, we believe higher prices are inevitable – needed to stimulate much more scrap supply and accelerate demand destruction to balance this market.
“Despite these tightening tailwinds, copper prices have risen only modestly this year and positioning has remained flat, providing a clear entry point for investors to go long.”
Goldman also raised its price targets to three, six and 12 months and now expects a new high within three months and a steady rise in prices to $13,000 per ton within a year.
