Goldman lowers copper supply forecast on Grasberg disruption, sees deficit in 2025

Group 1: Supply Forecast Changes - Goldman Sachs has lowered its global copper supply forecast for 2025 and 2026 due to disruptions at the Grasberg mine in Indonesia [1] - The bank estimates a potential loss of 525,000 metric tons of copper supply, leading to a reduction of 160,000 tons in the second half of 2025 and 200,000 tons in 2026 [3][9] - Grasberg's production is expected to decline by 250,000 to 260,000 tons in 2025 and by 270,000 tons in 2026 [4] Group 2: Impact on Freeport McMoRan - Freeport McMoRan has declared force majeure and halted mining activities to prioritize the rescue of trapped workers, with two bodies recovered so far [2] - The company anticipates very low production in the fourth quarter of 2025, with operations potentially restarting next year [5][6] - Grasberg accounts for half of Freeport's proven reserves and 70% of its projected copper and gold output through 2029, leading to a share price drop of over 21% since the update [7] Group 3: Market Implications - The disruption has shifted the global copper market from a projected surplus of 105,000 tons in 2025 to a deficit of 55,500 tons, while 2026 is expected to remain in a small surplus [8] - Goldman Sachs revised its estimates for global mine production growth for 2025 to 0.2%, down from 0.8%, and for 2026 to 1.9%, down from 2.2% [9] - The supply risks support Goldman's bullish outlook on copper prices, reaffirming a target of $10,750 per ton by 2027 [9] Group 4: Price Forecasts - Goldman sees upside risks to the December 2025 LME price forecast of $9,700 per ton, with potential prices in the $10,200-$10,500 range [10] - Current contracts are priced at $10,336 per ton, reflecting a 3% increase on the day [10]