Goldman Sachs downgrades copper supply forecast after Grasberg mine disruption

Goldman Sachs has significantly lowered its global copper mine supply forecasts for 2025 and 2026, citing a 525,000-metric-ton disruption at Indonesia's Grasberg mine. This revision shifts Goldman's 2025 global copper balance from a projected 105,000-ton surplus to a 55,500-ton deficit, leading the bank to see upside risks to its December 2025 LME copper price forecast, suggesting a range of $10,200-$10,500, and reinforcing its long-term bullish outlook of $10,750 by 2027.

Analysis

Goldman Sachs has materially revised its global copper supply forecast following a significant disruption at Freeport-McMoRan's Grasberg mine, the world's second-largest. The bank now anticipates a total supply loss of 525,000 metric tons, prompting a reduction in its 2025 global mine supply growth forecast from 0.8% to just 0.2% and its 2026 forecast from 2.2% to 1.9%. The most critical implication of this revision is the shift in the projected 2025 global copper balance from a 105,000-ton surplus to a 55,500-ton deficit. The disruption's severity is underscored by Freeport's guidance for "very low" production from Grasberg in Q4 2025, with a full restart not expected until 2026. Consequently, Goldman Sachs has identified upside risks to its December 2025 LME copper price forecast of $9,700 per ton, now suggesting a potential range of $10,200-$10,500. This event reinforces the bank's long-term bullish outlook, which targets $10,750 by 2027, citing ongoing structural challenges in the mining sector.

Key Decisions for Investors

• The projected shift to a copper market deficit in 2025 provides a strong basis for maintaining or increasing long exposure to copper, as price forecasts have been revised upwards to the $10,200-$10,500 range.
• Investors holding Freeport-McMoRan (FCX) should anticipate near-term headwinds due to the significant production loss at Grasberg, which will likely impact revenue and operational performance through 2025, warranting a re-evaluation of the position despite a higher copper price environment.
• The fragility of the copper supply chain, highlighted by this disruption, reinforces the long-term bullish thesis for the commodity; investors should monitor the Grasberg restart timeline, as any further delays could exacerbate the deficit and drive prices higher.