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 major disruption at Indonesia's Grasberg mine, which led Freeport-McMoRan to declare force majeure. This incident is expected to result in a total loss of 525,000 metric tons of copper supply, shifting Goldman's 2025 global copper balance from a projected 105,000-ton surplus to a 55,500-ton deficit. Consequently, the bank sees upside risks to its December 2025 LME copper price forecast, now suggesting prices could reach $10,200-$10,500 per ton, while maintaining a long-term bullish outlook of $10,750 per ton by 2027 due to persistent structural supply challenges.

Analysis

Goldman Sachs has materially altered its global copper outlook following a significant operational disruption at Freeport-McMoRan's Grasberg mine, which prompted a force majeure declaration. The incident is projected to remove a total of 525,000 metric tons of copper from the market, leading Goldman to slash its global mine production growth forecast for 2025 from 0.8% to just 0.2%. This revision fundamentally shifts the bank's 2025 market balance forecast from a 105,000-ton surplus to a 55,500-ton deficit, while 2026 is still projected to hold a small surplus. Consequently, Goldman now sees upside risk to its December 2025 copper price forecast of $9,700 per ton, suggesting a potential range of $10,200-$10,500. This event exacerbates pre-existing supply-side challenges, including other recent mine disruptions, and reinforces the bank's long-term bullish copper outlook with a price target of $10,750 by 2027.

Key Decisions for Investors

• Given the forecast shift from a supply surplus to a deficit in 2025, investors may consider long positions in copper to capitalize on the strong upward price pressure, with Goldman Sachs now seeing prices potentially reaching the $10,200-$10,500 range.
• Investors holding Freeport-McMoRan should anticipate significant operational and financial headwinds through 2025 and into 2026 due to the Grasberg disruption, justifying a cautious stance on the stock's near-term performance.
• The tighter supply environment and higher price forecasts could create favorable tailwinds for other global copper producers not affected by similar disruptions, presenting a potential relative value opportunity.
• Closely monitor updates on the Grasberg mine restart timeline, as any deviation from Freeport-McMoRan's guidance could further impact supply balances and introduce additional volatility to copper prices.