Goldman Cuts Copper Forecasts Diminish Miners’ Profit Outlook

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Goldman Sachs cut its 2025 forecast for copper prices by a third, dimming the profit outlook for the red metal’s biggest miners.

The US bank warned this week that the expected rally in the copper market will not materialize as the Chinese property meltdown depresses demand for the commodity. It now expects copper to average $10,100 a tonne next year, well below its estimate four months ago that it would reach an all-time high of $15,000.

“Copper’s rally is overdue,” Goldman analysts wrote in a note, citing a slump in Chinese metals consumption that has deepened over the past few months.

“As a result, and given the continued weakness of China’s property sector, we believe that the depletion of copper stocks – and the accompanying price increase – will likely occur much later than previously thought.”

The copper withdrawal adds to the loss of profitability for the world’s biggest miners, such as BHP and Rio Tinto, which are facing a slump in the price of iron ore – the main profit driver.

Copper’s 2.1 percent drop on Tuesday sent shares in Freeport-McMoRan down 6 percent, while Anglo American and Glencore fell more than 4 percent.

Used for electrical cables and batteries, which are crucial as the world tries to decarbonise, the red metal hit an all-time high of more than $11,000 in May as BHP eyed a £39bn takeover of to rival Anglo American, which eventually collapsed.

Although it has been in the focus of investors because of an expected increase in demand, BHP admitted in its annual commodity outlook published last week that the copper market will run a marginal surplus this year and an even bigger one next year.

The metal has fallen nearly 20 percent since May to around $8,950 a tonne, sparking a wave of pessimism among top lenders about the medium-term outlook for a metal used in everything from renewables to power grids .

Falling prices will likely impact miners’ profits in the future. For example, Freeport-McMoran, a major US copper miner, estimates that a $220 per tonne change in copper prices would increase expected core earnings by $430 million on average.

Global copper stockpiles rose to their highest level in four years as weak demand led to excess metal entering warehouses, according to Bloomberg data. In China, inventories rose in June to the highest level since March 2020, when Covid-19 brought Asia’s largest economy to a halt.

Goldman’s new forecast follows the departure of former metals strategist Nicholas Snowdon, who has now joined commodities trader Mercuria.

Other banks also tempered their outlook for the copper market. Macquarie said last month that strong supply and weak demand had “pushed the market into surplus earlier than expected, with the market expected to remain in surplus in 2025 and 2026”.

The Australian bank expects the lowest quarterly average price of $8,000 a tonne in 2026.

While BHP predicts weakness in the short term, the Australian mining group is bullish on the medium term. It warned of the possibility of a “systematic excess of demand over supply” as clean energy ramps up in the last third of the 2020s, resulting in an “upward” price regime.