Goldman Sachs warns: Copper price plunge risk intensifies, Strait blockade may become the "last straw"!

When investing in stocks, rely on JinQilin analyst reports—authoritative, professional, timely, comprehensive—helping you uncover potential thematic opportunities!

Source: Jinshi

As the situation in the Middle East continues to remain volatile, Goldman Sachs recently issued a warning: if the Strait of Hormuz, a critical global shipping chokepoint, remains continuously blocked, the price of “Copper Doctor” will face the risk of further steep declines.

At present, the metals market is in extreme unrest. U.S. President Trump has issued a final ultimatum to Iran, demanding that it reach an agreement within the deadline, or Iran’s civilian infrastructure will face large-scale attacks. As a result, over the past month, the surging oil and gas prices have begun to squeeze the space for global economic growth, and the base metals market is generally under pressure.

In a report, the Goldman Sachs analyst team led by Aurelia Waltham pointed out: “We believe that in the short term, the risk to copper prices is clearly tilted to the downside. If the duration of a shipping disruption through the Strait of Hormuz exceeds expectations, it will cause energy prices to remain at high levels for the long term, thereby dragging down the pace of global economic growth.”

Although Goldman Sachs’ benchmark forecast suggests that shipping through the strait could gradually resume starting in mid-April, analysts emphasize that copper prices have now clearly deviated from fundamentals. According to Goldman Sachs’ calculations, copper’s “fair value” should be around $11,100 per ton, while the current trading price is far above this level. Since the U.S. and the U.S.-aligned side launched attacks on Iran, copper prices have fallen cumulatively by about 7%.

Despite supply tightness in markets outside the U.S. and support for copper prices from countries’ demand to replenish strategic reserves, Goldman Sachs warns that once the global economy enters its preset “severely unfavorable” scenario, these supporting factors will become negligible.

“In the current market, copper prices lack fundamental support. If economic prospects worsen further and investors start selling risk assets, copper prices can easily trigger another round of declines,” Goldman Sachs said plainly in its report. Based on this, Goldman Sachs has lowered its average copper target price for this year from $12,850 per ton to $12,650.

However, UBS said it remains optimistic about the medium-term outlook for copper: “With marginal improvements in geopolitical stability and continued escalation of global investment in grid upgrades and electrification, the logic behind structural demand growth for copper and aluminum has not changed.”

As of this morning, on the London Metal Exchange (LME), copper futures are up slightly by 0.3% to $12,400 per ton. Market sentiment remains fragile, and investors are closely watching the latest developments in Trump’s policy toward Tehran.

		Sina Statement: This message is a reprint from Sina’s partner media. Sina.com posts this article for the purpose of conveying more information, and does not mean to endorse its viewpoints or verify its descriptions. The article content is for reference only and does not constitute investment advice. Investors act on their own risk.

Vast information and precise interpretation—available in the Sina Finance APP

Editor: Ling Chen