Copper’s rally this year has gone largely unnoticed, given so many other events in the markets, but it’s a topic that many people – including the Goldman Sachs commodities team and I -even – have been writing for a long time.
Goldman’s article titled “Copper is the New Oil” is one of the most widely read research articles of the decade. The thesis is well known because copper grades are declining and no new projects have been approved this decade. Additionally, the green transition (and possibly AI) will require large quantities of copper and there is a risk of a structural deficit which will be very difficult to resolve without much higher prices.
For most, 2025 or 2026 was the year the deficit began to widen, in part because of the start of the QB2 megaproject in Chile late last year. However, at the same time, Panama also closed a mine that provided around 1.7% of global production. This appears to have brought forward some timelines, depending on who you ask.
As for Goldman, the same analysts nicknamed “copper is the new oil” today threw out another nice line saying that prices are only at the “foot of what will be its Everest.”
It was in Santiago where the copper world gathered this week at the annual Cesco Week symposium. Prices are currently at a 22-week high, but Goldman expects it to rise more than 50% from there, to $15,000 per ton, or about $6.50/lb.
Copper. WE
Opinions certainly differ, with some sticking to predictions of physical tightening for the second half of the decade. However, all six members of the panel of market participants were unanimous in saying that higher prices would eventually arrive. You can take this as a sign of a one-sided deal or as a sign that no one can find any flaws in the forecast.
In a separate report, here’s what Citi had to say:
Funds pushed copper up to ~$9,500/t (+~20% since late November), due to early signs of global reflation and in anticipation of physical deficits. Pure copper stocks, which are even more forward-looking, have climbed to a price of $10.5k-$12.5k/t copper in perpetuity, suggesting there is further room for forward-looking investors to drive up commodity prices. Indeed, copper prices implied by pure stocks are consistent with our view that we have entered the second secular copper bull market of this century. Likely withdrawals of Russian metals from the LME and modest deficits should support prices around their current levels over the next three months. We still forecast a trajectory of up to $15,000/t by 2026 in our bullish scenario.
One of the risks mentioned is that speculators are at the origin of the current movement. On the LME, long positions reached 84,117 contracts, the equivalent of more than two million tonnes, at the end of last week. This is the highest level since the LME began publishing its trader commitments report in early 2018.
At the CME, long copper positions are at their highest level since January 2018. What is also notable is that on both exchanges, short positions are also high, leaving the net below 2021 highs . Volumes are up around 20% year-on-year.
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