Goldman Sachs Warns of Major Copper Deficit Following Grasberg’s 525K Ton Production Cut

Copper markets brace for supply shock as Wall Street giant sounds alarm.

THE GRASBERG EFFECT

Goldman Sachs projects severe copper shortages after Indonesia's Grasberg mine slashes 525,000 tons from production forecasts. The cuts trigger immediate price volatility across industrial metals.

WALL STREET'S WAKE-UP CALL

Analysts scramble to revise models as the deficit threatens global manufacturing pipelines. The timing couldn't be worse—just as electric vehicle demand hits unprecedented levels.

MARKET REALITIES

Traders face squeezed margins while manufacturers hedge against potential delays. The 525,000-ton shortfall represents nearly 2% of global annual supply—enough to move markets for quarters.

Another classic case of traditional finance discovering physical constraints exist. Maybe they should've mined more when rates were low.

Grasberg Mine Disruption Sparks Global Copper Supply Shortfall

The September 8 incident at Grasberg Mine has created some pretty substantial market concerns, with Goldman Sachs copper supply projections now reflecting a total loss of 525,000 metric tons. The disruption occurred when heavy mud FLOW trapped workers underground, which forced Freeport-McMoRan to halt operations at what is the world’s second-largest copper mine.

Goldman Sachs stated that the production loss exceeds their typical allowances for global supply disruptions, leading them to cut global mine production growth estimates for 2025 to 0.2% from 0.8%.

Supply Cuts Drive Market Rebalancing

Grasberg will see its production fall by 250,000 to 260,000 tons in 2025 and even by 270,000 tons in 2026. Goldman Sachs noted that fourth quarter 2025 production from Grasberg will be very low, as the unaffected areas could restart mid-quarter.

Goldman said:

“The unaffected portion accounts for about 30%-40% of Grasberg’s annual production capacity.”

The rest of the mine will restart sometime in 2026, which means we’re looking at an extended period of reduced output that will affect global markets.

Price Forecasts Adjusted Higher

Goldman Sachs anticipates upside risks to its December 2025 copper price forecast of $9,700 a ton, and they propose that prices may actually come in between $10,200 and $10,500 a ton. The imbalance in copper supply has changed their balance projection of 105,000 tons to the deficit projection of 2025 in the world balance.

The bank reaffirmed its long-term bullish copper price forecast of $10,750 a TON by 2027, citing challenges including deeper mines, lower grades, and harder ore extraction compounded by other disruptions at Kamoa-Kakula and also El Teniente mines.

At the time of writing, the London Metal Exchange is trading benchmark three-month copper prices at $10,277.50 a ton, already reflecting some of the supply concerns that have emerged from recent mining disruptions along with broader market volatility.