"Commodity Flagbearer" Goldman Sachs: Three Major Drivers Stimulate, Copper May Welcome a New Bull Market

In the wave of green transformation, copper, this ancient metal, is 迎来新的曙光。

Goldman Sachs stated in a research report published on the 25th that with the global electrification wave sweeping in, copper prices are expected to rise again in the next two years, potentially reaching a historical high. It is expected that copper prices will reach USD 10,500 to USD 11,500 per ton by 2025. Currently, the price of London copper futures is USD 9,475 per ton, indicating a potential increase of 10%-21% to the target price.

The bank believes that the copper market is at the starting point of a new upward cycle, and there will be a supply-demand imbalance in the coming years. It is expected that the copper supply gap will reach 180,000 tons and 250,000 tons in 2025 and 2026, respectively.

The report also proposed a key price range: "Aluminum Ceiling" and "Chilean Floor." Goldman Sachs believes that when copper prices exceed four times the price of aluminum, aluminum will replace part of the demand for copper, thus limiting copper prices to USD 10,500/ton in 2025 and USD 11,500/ton in 2026. This price cap is referred to as the "Aluminum Ceiling." The "Chilean Floor" refers to the need for copper prices to reach USD 10,500/ton by 2026 to maintain the copper production of the world's largest copper producer—Chile, avoiding a significant supply gap in the early 2030s.

So, what factors are driving Goldman Sachs' optimistic outlook on copper prices? Analyst Eoin Dinsmore pointed out that the growth of electrification demand, the push from China's stimulus policies, and supply-side bottlenecks are collectively providing solid support for copper prices.

Electrification Wave, Power Grid as the Biggest Driver

Electrification is the core force driving the growth of copper demand. Goldman Sachs pointed out that as the world transitions to clean energy, the demand for copper in power grids and electrical infrastructure will become a key growth point in the coming years. It is expected that by 2030, the demand for copper in power grids and electrical infrastructure will increase by more than 300,000 tons annually, equivalent to the additional copper demand of one United States.

The report noted that the growth of power grid investment in the United States, Europe, and China will reach annual growth rates of 4%, 3%, and 2.5%, respectively. As the share of electricity in total energy demand rises from 20% in 2023 to 50% in 2050, the power grid will become a pillar of the economy. Goldman Sachs believes that despite facing some permitting challenges, the growth of power grid investment will provide continuous support for copper demand.

In addition, Goldman Sachs also pointed out that China's electrification demand will become an important driving force for global copper demand growth. The report predicts that China's refined copper demand will grow by 4% in 2025, primarily driven by electrification and stimulus policies.

China's Stimulus Policies Offset Tariff Impact

Secondly, China's stimulus policies will provide strong support for copper demand.

As the world's largest copper consumer, China's policy direction has a profound impact on the copper market. Goldman Sachs pointed out that China's stimulus policies in areas such as home appliances and electric vehicles (EVs) will significantly boost copper demand. The report estimates that China's stimulus policies will increase copper demand growth by 2 percentage points, while tariffs will only reduce demand by 0.8 percentage points. **

The report predicts that China's refined copper demand will grow by 4% in 2025, driven mainly by electrification and stimulus policies.

Supply Side "Dual Constraints"

The rise in copper prices is closely linked to supply-side bottlenecks. Goldman Sachs points out that by 2030, copper demand will increase by 4 million tons, requiring a significant increase in mine and scrap copper supply. However, the growth of mine supply faces numerous challenges, including increased capital expenditures, extended mine lifespans, and declining ore grades.

The report indicates that short-cycle, low-capital expenditure mines in the Democratic Republic of the Congo will become the main supply growth point, but stable supply from Chile is crucial. Chile is the world's largest copper producer, but its output has been declining in recent years. Goldman Sachs believes that to maintain Chile's copper production and encourage miners to invest in new projects, copper prices need to reach a "bottom line" of $10,500 per ton by 2026.

Additionally, Goldman Sachs also points out that the growth of scrap copper supply will provide some buffer for the copper market. However, the growth rate of scrap copper supply is unlikely to meet the rapid increase in copper demand in the coming years. The report predicts that scrap copper supply will grow by 3% in 2025, but this growth rate is far below the growth rate of copper demand