Goldman Sachs Cuts Copper Price Forecast on Weak Chinese Demand

Goldman Sachs (NYSE:GS) has revised its copper price forecast, significantly lowering its 2025 estimate due to weakening demand from China, a major consumer of the metal.

The American investment bank now anticipates that copper prices will average US$10,100 per metric ton next year, a sharp reduction from its previous forecast of US$15,000.

According to Bloomberg, the US$15,000 prediction came from former analysts Jeffrey Currie and Nicholas Snowdon, while the new outlook was outlined in a note by analysts including Samantha Dart and Daan Struyven.

Explaining their thoughts on China, Dart and Struyven point to its ongoing economic challenges, including a persistent downturn in the property sector and slower-than-expected recovery in manufacturing and exports.

As copper demand from the Asian nation has slowed, inventories of the red metal have risen.

Goldman Sachs has also adjusted its price forecasts for other commodities.

It is now estimating an aluminum price of US$2,540 per metric ton, down from US$2,850. The bank is holding to its bearish outlook on iron ore and nickel, reflecting the broader trend of weaker demand in key markets.

"Softer-than-expected China commodity demand, as well as downside risks to China’s forward economic outlook, lead us to a more selective, less constructive tactical view of commodities," the analysts said.

China's economic growth is struggling to meet the government's 5 percent annual target, primarily due to a surplus of raw material inventories that is unlikely to clear soon due to softening demand.

Goldman Sachs remains optimistic about gold, maintaining a target price of US$2,700 per ounce for early 2025. The bank cites increased interest from managed money players in the west and continued demand from central banks as key factors supporting its positive outlook. Interest rate cuts from the US Federal Reserve are also seen helping gold.

Major miners involved in copper and aluminum production saw share price declines on the news, including Freeport-McMoRan (NYSE:FCX), BHP (LSE:BHP,ASX:BHP,NYSE:BHP) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO).

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.