Goldman Sachs is sticking with its $12,650-per-metric-ton price target for copper in 2026. According to Reuters, the bank sees a 490,000-ton market surplus.
However, the forecast rests on a fragile premise – that traffic through the Strait of Hormuz, a global commodity chokepoint, will return to normal soon.
Copper's issue isn't oil; it is a shortage of sulfuric acid – the essential compound for solvent extraction and electrowinning (SX-EW). Around 40% of global sulfur exports go through the Strait, which has been effectively closed since the war with Iran started.
Furthermore, China's decision to ban sulfuric acid exports, effective May 1, 2026, has severed a primary supply line for miners in the Southern Hemisphere.
The Investor Takeaway
- The Strategy: Consider diversification from pure "leach" producers (SX-EW) in Chile and the DRC.
- The Trade: Explore vertically integrated majors like BHP Group Limited (BHP) or Rio Tinto Plc (RIO), which use centralized procurement to bypass merchant acid markets.
- The Risk: If the Hormuz blockade extends through June, the projected surplus could vanish as DRC production hits a wall.
A Tale of Two Mining Hubs
The sulfuric acid crunch affects around 17% of the global copper supply that relies on leaching rather than smelting. Goldman Sachs sees two major markets where production now races against dwindling input.
- Chile: The world's top producer is the most exposed. According to SunSirs, in 2025, Chile sourced one-third of its acid from China. With the export ban in place, roughly 200,000 tons of Chilean production—about 1% of global supply—is now at risk.
- The Democratic Republic of Congo (DRC): While miners currently hold two to three months of inventory, supply delays extending past June could curtail 125,000 tons of output in 2026.
However, conflicts affect both sides of the economic curve. In an "adverse scenario," Goldman sees weakening global growth draining about 140,000 tons of demand – effectively masking the supply shock.
The Integrated Exception
While peers scramble for reagents, BHP is leaning into the surplus. The world's largest miner expects full-year copper output to hit the upper half of its 1.9-million to 2-million-ton guidance.
"During the quarter, we submitted a permit application for Escondida's new concentrator, and Resolution Copper achieved a key milestone, allowing the project to progress drilling required to complete its mine design and feasibility study," outgoing CEO Mike Henry said in the latest operational review.
However, BHP's vast size makes it difficult to find avenues for meaningful growth. After nearly a decade of avoiding the continent, BHP is re-engaging with Africa through a 2015 South32 spin-off and a failed bid for Anglo American.
The company is currently launching exploration workshops across Zambia, South Africa, Namibia, and Angola. "Many of the remaining large deposits are either deeply buried or hidden beneath geological cover," Campbell McCuaig, Head of Global Generative Exploration, said, according to Reuters. He clarified that the company uses advanced geological methods and large data analysis to detect those resources.
