Goldman Sachs sees strong upside in copper; Iron Ore and other metals to fall 17%

Synopsis:
Goldman Sachs favours copper for 2026, citing strong structural demand from electrification and AI infrastructure, while remaining bearish on aluminum, lithium, and iron ore due to oversupply, particularly from Chinese production, expecting notable price declines.

The industrial metals sector encompasses key materials like copper, aluminum, lithium, and iron ore, essential for construction, manufacturing, energy, and technology applications. Prices are highly sensitive to global economic trends, supply dynamics, and policy shifts.

Goldman Sachs favors copper for 2026, citing strong structural demand from electrification and AI infrastructure, while remaining bearish on aluminum, lithium, and iron ore due to oversupply, particularly from Chinese production, expecting notable price declines.

Goldman on Metals

Goldman Sachs has highlighted a mixed outlook for industrial metals, reflecting both macroeconomic tailwinds and supply-driven pressures. The firm notes that metals prices have rallied year-to-date, largely supported by expectations of US Federal Reserve rate cuts, ongoing dollar depreciation, and improving growth prospects in China. These macro factors have created a favourable environment for metals demand, while supply disruptions, policy interventions, and accelerated AI-related capital expenditure have added further momentum to the recent uptrend.

Despite the broad rally, Goldman Sachs maintains a selective stance for its 2026 metals outlook, with copper emerging as its top pick. The bank expects copper to benefit from structural demand drivers, including electrification, grid expansion, renewable energy growth, and increasing AI-related power infrastructure needs. Reflecting this optimistic view, Goldman Sachs has revised its H1 2026 LME copper price forecast upward to $10,710 per tonne, from the previous estimate of $10,415.

However, the firm remains bearish on several other key metals due to strong supply growth, particularly from Chinese overseas investments. Increased production capacity and higher output expectations are weighing on the future price trajectory of aluminum, lithium, and iron ore. These metals are expected to see oversupply conditions that limit price growth and, in some cases, trigger declines over the next two years.

It has projected significant price corrections for several key industrial metals by the end of 2026, driven largely by strong global supply growth, especially from Chinese overseas investments. 

According to the firm, aluminum prices are expected to decline by around 18%, reflecting rising production and slower-than-expected demand. Lithium is forecast to see the steepest drop, at about 23%, as oversupply from new mining and refining capacity continues to outpace demand from the EV and battery sectors. Iron ore prices are also projected to fall by nearly 17%, pressured by expanding supply and moderating steel demand. These forecasts signal a bearish outlook for these metals despite the broader rally seen earlier in the market.

Additionally, with market capitalization of Rs. 35,356 cr, the shares of Hindustan copper Ltd are closed at Rs. 365.40 per share, increasing 8% in today’s market session, making a high of Rs. 368, from its previous close of Rs. 339 per share. The reason behind this is LME copper prices soared by 8% in two weeks.

Written by Manideep Appana

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