Copper: 12m target $4,800/t – Goldman Sachs

Research Team at Goldman Sachs, takes a note that Copper prices have rallied sharply and net speculative positioning has reached its highest level since 2005 over the past two months.

Key Quotes

“We believe that while part of the rally has been warranted, prices have rallied too much too soon, and we expect copper will decline to c.$5,000/t on a 3-mo view. The market is, in our view, positioned for a major acceleration in Chinese and/or global metals demand growth, with our modelling estimates suggesting that the copper market is pricing a near tripling in global copper demand growth to c.6% in 2017. By contrast, we expect Chinese copper demand growth will slow in the near term on Chinese property policy tightening, and that Mr. Trump’s stimulus is unlikely to impact metals demand directly until it kicks in later in 2H17 or early 2018.”

“Further, we are entering the seasonally weak period for copper demand (1Q), during which period inventories normally build to the tune of c.400kt even in a balanced market (and our base case is for a small-moderate surplus market during 2017).”