Goldman Sachs significantly raised its long-term copper price forecast and believes that aluminum prices are too high in the short term

Goldman Sachs has shown a strong bullish stance on the copper market in its latest research report, while warning that aluminum prices are overvalued in the short term.

According to the Wind Trading Desk, Goldman Sachs has reassessed the long-term outlook for copper and aluminum in its latest report, raising its long-term copper price expectation for 2035 to $15,000 per ton, significantly higher than the market consensus of $10,900 per ton.

Goldman Sachs' new "Long-term Copper Incentive Curve" pricing model indicates that copper prices will be capped below $11,000 per ton in 2026-2027 (due to a slight oversupply in the market currently), but a supply gap is expected to emerge in the latter part of this decade due to resource constraints and growing demand in key sectors.

Meanwhile, Goldman Sachs maintains a bearish stance on aluminum prices, predicting that aluminum prices will fall to $2,350 per ton in Q4 2026, and believes that prices will not return to current levels until the early part of the next decade. Goldman Sachs expects that new supply will push the market into oversupply, and while aluminum demand will benefit from similar demand drivers and substitution effects as copper, aluminum will not face the resource constraints encountered by copper.

Copper: Resource Constraints Drive Significant Price Increases After 2028

Goldman Sachs' innovative pricing model points to higher copper prices. The firm has introduced a new "Long-term Copper Incentive Curve" pricing model, which breaks through the limitations of traditional project incentive curves. The new model comprehensively considers factors such as scrap recovery, substitution effects, extended mine life, and adjustments for stalled and emerging projects, expecting a supply gap to emerge in the latter part of this decade due to resource constraints and growing demand in key sectors.

Goldman Sachs has slightly raised its copper price forecast for 2026 to $10,500 per ton, just below the market consensus, mainly reflecting expectations of a slight oversupply in the short term. However, the long-term forecast is more noteworthy: the target copper price for 2035 is set at $15,000 per ton (equivalent to $11,500 per ton in 2025 dollars or $5.20 per pound), significantly higher than the market consensus and forward prices. Goldman Sachs has also raised its copper price forecasts for 2029 and 2030 to $12,000 per ton and $12,250 per ton, respectively.

Goldman Sachs' analysis reveals three core reasons for the formation of a copper supply gap:

First, the short-term decline in mine output is much slower than expected, but long-term operating costs have risen significantly. Data shows that mine output in 2024 exceeds the 2014 forecast, mainly due to extended mine life. Although output has been maintained, the copper ore grades of these mines have declined by 25%, meaning that 33% more ore needs to be mined to produce the same amount of copper, leading to a significant increase in operating costs.

Second, the Democratic Republic of the Congo has recently seen unexpected production growth but faces constraints. The country holds 8% of the world's copper reserves, with current production accounting for 14% of global output. Over the past decade, Chinese investment has driven significant growth in the country's production. Although Goldman Sachs has included an additional 500,000 tons of production growth from the Congo in its forecast, this assumption faces three major constraints: the U.S. seeking to balance China's influence in the Congo, the country's low mineral exploration spending, and Africa accounting for only about 5% of the world's undiscovered copper resources, suggesting that the current 14% production share is difficult to maintain in the long term Third, the lower-than-expected demand for refined copper is mainly due to the strengthening of the aluminum substitution effect. Goldman Sachs estimates that without substitution and conservation effects, copper consumption in 2024 would be 13% or 4 million tons higher. Research shows that for every increase of $1,000/ton in the copper-aluminum price spread, the net substitution rate increases by about 0.1%, which corresponds to a reduction of 175,000 tons in refined copper demand by 2035.

In addition, Goldman Sachs' comprehensive waste supply model shows that after deducting copper losses flowing into the steel and aluminum value chains, the post-consumption recycling rate has been limited to around 75% over the past decade. Goldman Sachs' core assumption is that the upper limit of the recycling rate is about 75%, but estimates that for every 10% increase in copper prices, the recycling rate will improve by 0.8%. However, this relationship will exhibit diminishing returns as the recycling rate approaches 80%. Goldman Sachs predicts a post-consumption waste recycling rate of 74% by 2030 (corresponding to a copper price of $12,250/ton), and in the long-term methodology, prices need to rise by 12.5% to increase the recycling rate by 2%, equivalent to an annual waste supply increase of 350,000 tons.

Aluminum: Current prices are too high, supply growth will drive prices down

Goldman Sachs maintains a bearish outlook on the aluminum market for the next 12 months, expecting that as new supply pushes the market into surplus, aluminum prices will fall to $2,350/ton by the fourth quarter of 2026. Although prices are expected to rebound thereafter, they will not return to current levels until the beginning of the next decade. While aluminum demand will benefit from demand drivers similar to copper and substitution effects, aluminum will not face the resource constraints encountered by copper.

Goldman Sachs has extended its long-term price forecast for aluminum, expecting prices to trade in the range of $2,900-$3,400/ton from 2030 to 2035 (approximately $2,600/ton in 2025 dollars).

Goldman Sachs believes that unlike the global resource constraints for copper, aluminum faces regional power constraints rather than inflationary constraints:

Electricity costs account for about 35% of aluminum operating costs, while bauxite remains abundant and inexpensive. Although Goldman Sachs expects European electricity prices to decline due to increased liquefied natural gas supply, aluminum producers in Europe and North America are increasingly finding it difficult to secure long-term (decades-long) electricity contracts at low prices (<$50/MWh), which will weaken the cost advantage of some first-quartile producers.

In the next decade, new aluminum supply growth may rely on cheap coal-fired power (around $40-$60/MWh), placing this new capacity in the second quartile of the global cost curve, with capital expenditure levels higher than in China but far lower than in developed markets. Prices of around $2,500/ton from 2026 to 2030 (in 2025 dollars) will be sufficient to incentivize new capacity in India and Indonesia, and then need to rise to about $2,600/ton (in 2025 dollars) from 2030 to 2035 to incentivize the next frontier regions. This will raise the copper-aluminum price ratio from an average of 3.8:1 in 2025 to 4.4:1 by 2035.

On the supply side, Goldman Sachs expects global production to grow by about 13 million tons from 2025 to 2035. Goldman Sachs believes that Central Asia, Iran, and sub-Saharan Africa will become the next centers of aluminum production growth. Among them, China Orient Group is advancing a $12 billion aluminum industry chain investment plan in Kazakhstan, and Yunnan Construction Investment Group is exploring investment opportunities in Tajikistan