Is the "bull market narrative" in copper about to collapse? Trump's copper tariff signal could mark the sharpest turning point from "bull" to "bear".

As the commodity market was still cheering for the repeated historical highs in copper prices, Wall Street financial giant Goldman Sachs first handed a "sweetener" to the bulls, followed by a bucket of "cold water". In the view of Goldman Sachs, the short-term rise in copper prices is driven by the "scarcity nature - mainly driven by the expansion of copper demand expectations brought by the new energy transition, the AI infrastructure frenzy", as well as the "hoarding nature under the threat of Trump's tariffs", pushing it forward. However, in the medium term, it will eventually return to the "global fundamentals" gravity field, especially once the US government imposes refined copper tariffs. LME copper prices will accelerate their decline. After copper prices rose from less than $11,000/ton at the end of November 2025 to a historical high of $13,387.50/ton on January 6, this Wall Street financial giant had to recalibrate its short-term path: Goldman Sachs significantly raised its first half of 2026 copper price forecast from $11,525/ton to $12,750/ton, citing the "scarcity premium" and the revaluation of hoarding nature in the market - especially the tension in the commodity market outside the US due to low inventory coverage. However, Goldman also emphasized that prices above $13,000/ton are difficult to sustain in the long term and maintained its cautious bearish forecast of $11,200/ton for LME copper prices in the fourth quarter of 2026. The global benchmark for copper prices - LME copper futures prices, seems to have begun a high-level oscillation trend, with LME three-month copper prices falling 1.5% to $12,702/ton on Thursday. The contract had reached a historical high of $13,387.50/ton earlier this week. With a rise of up to 30% from November to January 6, Goldman Sachs analysts believe that LME copper futures trading prices have exceeded the fair fundamental level of around $11,400/ton. Goldman Sachs said that the firepower that has been driving up copper futures prices mainly comes from the combination of two main lines: the first line is the "cross-regional shortage" effect triggered by expectations of US tariffs, with concerns that the US may impose copper-related tariffs leading to the reallocation of trade and inventories, and the continuous increase in Comex copper stocks reflecting a large influx of copper into the US market; at the same time, LME copper inventories continue to decline, making availability in markets outside the US even tighter. This "US hoarding, overseas depletion" structural mismatch directly boosts the scarcity premium in copper prices. The second main line is the strong boost brought by the "AI computing power bull market narrative" led by technology giants. Copper is not just an industrial metal, but also a thermometer of global economic growth and AI capital expenditures expectations. The market has embraced "risk assets" at the beginning of the year, and the narrative of power, cables, equipment, and supporting infrastructure construction brought by AI data center construction has further amplified the aggressive allocation of funds. Even in the midst of fluctuations, the AI investment theme continues to provide an emotional base for copper prices. In the era of global artificial intelligence and digital transformation, the construction of global super-large data centers like "Stargate" has shown explosive growth in copper demand. The high-speed interconnection systems, cooling systems, high-performance network equipment, and data center storage devices highly rely on copper in the large AI data centers being built by Microsoft, Google, Amazon, and Meta, the parent company of Facebook. This structural increase in demand is gradually becoming a new engine for copper market demand growth. Why is Goldman Sachs raising copper target prices on the one hand, while maintaining that "high levels won't last"? Goldman Sachs believes that the low inventory coverage outside the US makes it difficult for the market to "ignore the tension in copper prices" in the short term. As long as the hoarding driven by cross-regional evacuation of the US copper market continues, the scarcity premium will stick to prices. This is the core reason why the institution raised its first-half forecast to $12,750/ton. However, Goldman is betting that the "hoarding logic" will peak in the second quarter. The second round of bull market in LME copper futures prices is attributed by Goldman Sachs' analysts to the continued hoarding in the US copper market and the closely related Trump administration tariff expectations. Once the tariff path under the Trump administration becomes clearer in the second quarter, Goldman believes that the copper commodity market may undergo two changes: weakened or even halted hoarding motives; and the focus of copper prices returning to the "true state" of global supply and demand. Goldman Sachs said that if the tariff decisions are delayed or not implemented, it would be a major bearish signal for LME copper prices, as it would mean there is no tariff threat and the market will refocus on the balanced supply and possibly temporary oversupply in the global copper commodity market. If expectations are strengthened by mid-year and a clear landing is expected, Goldman believes that the logic of US copper hoarding may end in stages, but it may also trigger a final wave of "rush" before the shoe drops. Goldman Sachs' analyst team also pointed out another market signal: the speculative long positions in the copper futures market have become very crowded. When speculative long positions are near historical highs, the market often enters the "late stage of a strong trend" - where prices can still continue to rise, but are more sensitive to any catalysts: good news will push prices higher; however, once the core narrative weakens (such as hoarding stoppage after tariffs land, inventory replenishment, and macro expectations turning weaker), the pullback will be more rapid. In more straightforward terms: the current LME copper futures prices have logic for an increase, but they also have "triggers for a stampede-like decline". Goldman Sachs concluded that once the hoarding logic weakens, the market is more likely to return to the "global fundamentals shifting from scarcity to surplus" gravitational center, and Goldman still bets on prices falling to the range near $11,200/ton. The narrative of the growth in the copper market size continues, but it has moved from the "hoarding and AI romantic narrative" to the more hardcore phase dominated by "inventory, policy, and position structure" - which often means greater volatility and sharper turning points.