Goldman Sachs Group has issued a warning that copper prices could face further declines if disruptions in the Strait of Hormuz persist. The metal market is closely monitoring the situation as a deadline set by U.S. President Donald Trump approaches, by which Iran must reach an agreement or face widespread attacks on civilian infrastructure.
Analysts at Goldman Sachs stated, "If the Strait closure lasts longer than our baseline assumption, we see near-term risks skewed to the downside, which could result in sustained high energy prices and potentially hinder global economic growth."
The firm's baseline scenario anticipates the Strait of Hormuz reopening by mid-April. However, analysts noted that current copper prices remain significantly above their estimated fair value of around $11,100 per ton. Since the U.S. and Israel launched strikes against Iran, copper prices have fallen by approximately 7%.
Tight supply conditions outside the U.S. and expectations of strategic stockpiling continue to provide support for copper prices, according to the analysts. However, they cautioned that these factors could lose their influence if the World Bank's global economic outlook turns "highly unfavorable."
"Current fundamentals for copper do not justify its present price levels," the analysts wrote. "Should the economic outlook deteriorate and investors reduce risk exposure, copper prices may decline further." Goldman Sachs has lowered its base-case forecast for copper this year from $12,850 per ton to an average of $12,650 per ton. Year-to-date, copper has averaged around $12,850 per ton.
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