Copper futures fall as Goldman cuts forecast on softening Chinese demand
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Freeport McMoRan (NYSE:FCX) -3.2% pre-market Tuesday as Goldman Sachs slashes its copper forecast for next year by nearly $5K/ton, saying China’s increasingly weak economic recovery will delay an expected rebound.
The expected sharp drop in copper inventories is now seen arriving much later than previously thought, Goldman says, cutting its copper price estimate to $10.1K/ton for next year compared with the bank’s previous target of $15K/ton, and pushing back its previous year-end 2024 forecast of $12K to post-2025.
“Softer than expected China commodity demand, as well as downside risks to China’s forward economic outlook, lead us to a more selective, less constructive tactical view of commodities,” Goldman writes.
The increased pessimism comes as China’s persistent property downturn and rising problems in its manufacturing and export sectors make the government’s target of 5% annual economic growth appear out of reach, the bank says.
China’s apparent copper demand started to decline in March, and a subsequent surge in inventories means the country is now much further away from the “stockout” scenario that underpinned previous forecasts, Goldman says.
Goldman also downgrades its 2025 price outlook for aluminum to $2,540/ton from $2,850/ton, and maintains bearish views on iron ore and nickel.
The pessimism over China also is affecting iron ore, which has tumbled to a two-week low after dropping back below $100/ton.
Among other affected stocks: BHP (BHP) -4.2%, Rio Tinto (RIO) -3.6%, Southern Copper (SCCO) -3.5%, Alcoa (AA) -2.7%, Century Aluminum (CENX) -2.7%, Vale (VALE) -2.2%.
Other potentially relevant tickers include (TECK), (HBM), (ERO), (KALU), (CSTM), (OTCQX:FSUMF), (OTCPK:GLCNF), (OTCPK:GLNCY), (OTCQX:AAUKF), (OTCQX:NGLOY).