Goldman Sachs Lifts Copper Forecasts as China Scrap Shortage Tightens Supply

The largest single revision comes from China's scrap market. Stricter VAT invoicing rules have shrunk the supply of domestic scrap, forcing manufacturers to substitute refined copper for scrap and tightening inventories. In plain terms, Chinese fabricators are melting down less used metal and buying newly refined cathode instead. Goldman Sachs estimates that scrap-to-cathode substitution adds $945 a ton to its end-2026 forecast and $2,985 a ton to its 2027 average, partly offset by smelters using more scrap themselves.

US buyers are taking metal out of the rest of the world as well. Stockbuilding in the United States continues ahead of potential tariffs, diverting copper from other markets, and the bank expects the US to hold more of the metal than it uses. Its central case assumes no refined copper tariff is announced, but it flags potential duties as a risk, particularly after the US midterm elections.

Investor positioning is the third support. Rather than assuming speculative money returns to neutral, the bank assumes positioning holds near this year's average of 16% of open interest in 2027 — that is, the share of outstanding futures contracts still held in open positions rather than closed out. It estimates that assumption adds $775 a ton to its annual average forecast, and links it to copper's exposure to AI, electrification, energy security and hard assets.

Weaker-than-expected mine supply sits behind the rest of the revision, and the bank's case rests on three conditions it names: continued competition for available metal, persistent Chinese substitution demand and sustained investment flows. Because the forecasts are built on no tariff announcement, a decision to impose refined copper duties would change the assumption underlying the numbers — the clearest single risk the bank identifies to its own outlook.