Goldman raises 2H25 copper price forecast on tariff-driven supply risks, China demand

June 25 (Reuters) - Goldman Sachs GS.N expects copper prices to rise in the second half of 2025 to an average of $9,890 per metric ton, the bank said in a note, citing fears of a global supply squeeze driven by U.S. tariffs and increased activity in China.

A widening gap between copper prices in the U.S. (COMEX) and the United Kingdom (LME) has led the world's largest economy to over-import the metal, roughly 400,000 kilotonnes (kt) so far this year.

While the global market is currently in surplus, these excess imports have sparked concerns over a shortage of copper outside the U.S., according to the bank.

Goldman said it expects the Trump administration to impose a 25% tariff on copper imports once it concludes an investigation into foreign copper.

In late February, U.S. President Donald Trump ordered a new investigation into potential tariffs on copper imports to rebuild domestic production of the critical metal, which is essential for electric vehicles, semiconductors, military hardware, and a range of consumer goods.

"Copper markets are pricing under 60% probability of a 25% import tariff by May," the bank noted.

Goldman forecasts copper prices will peak at $10,050 in August as the tariff threat erodes ex-U.S. inventories, while Chinese demand and sentiment remain resilient. Prices are then expected to ease to $9,700 by December.

The bank emphasized that "the market is currently not pricing a high likelihood of the 25% tariff," and as a result, it recommends a trade strategy that capitalizes on the price differential between U.S. and UK copper markets.

China, which is one of the largest destinations for copper, has been experiencing "relatively resilient activity for now," which further contributed to the bank's upward price revision.

For 2026, Goldman slightly trimmed its average copper price forecast to $10,000 per ton from $10,170 earlier, with prices projected to reach $10,350 by December that year.

It remains bullish on copper for 2027, expecting prices to average $10,750 amid a widening supply deficit driven by strong electrification demand and limited mine supply growth.