Copper Supply Deficit Surges to 640,000 Tonnes on Sulphur Shortage
What You Need to Know
- Goldman Sachs increased copper deficit forecast tenfold to 640,000 tonnes within weeks.
- Sulphuric acid shortage from reduced oil refining threatens 325,000+ tonnes of copper production.
- Copper market faces structural undersupply from two decades of mining underinvestment amid rising electrification demand.
- UBS projects copper prices reaching $15,000 per tonne by March 2027, exceeding historical highs.
Goldman Sachs just revised its copper deficit forecast tenfold, from 60,000 tonnes to 640,000 tonnes, in a matter of weeks. The revision is not a rounding error; it reflects a supply structure that was already fragile before the Iran conflict added several simultaneous pressure points.
The mechanism most analysts missed is sulphur. Sulphuric acid is a critical input for copper and nickel mining, and it is a byproduct of oil refining. When Hormuz disruptions cut refining throughput, sulphur output falls with it, and mine operations in the DRC and Chile cannot run at full capacity without it. Wood Mackenzie puts the DRC exposure at 125,000 tonnes of copper production at risk; Morgan Stanley estimates another 200,000 tonnes of Chilean supply is threatened, compounded by China’s ban on sulphuric acid exports. This is before accounting for operational problems at Grasberg and Kamoa-Kakula, two of the largest copper mines on earth, which were already contributing to tightness Goldman had initially underestimated by a factor of ten.
The copper market was already forecast to be in deficit this year. The war did not create the problem; it exposed how little margin the supply chain had.
The deeper issue is structural, not cyclical. Mining executives are pointing to two decades of capital discipline, which is a polite way of saying underinvestment in new supply, now colliding with demand from electrification and data center buildout that is not softening. UBS has copper at $15,000 per tonne by March 2027, which would be well above current all-time highs. Aluminum is running a similar dynamic, with the Middle East supplying roughly 10% of global output and prices already at four-year highs, prompting HSBC’s Paul Bloxham to describe the situation as a supply-driven super-squeeze rather than a demand surge. That distinction matters for how long the pressure holds: demand-driven rallies correct when buying slows, but supply destruction takes years to rebuild.
Pan African Resources CEO Cobus Loots has a confirmed timeline for when new capacity could realistically arrive: not soon. The catch-up investment cycle he described would take years to translate into additional tonnes, which means the deficit Goldman is now pricing at 640,000 tonnes has no obvious near-term release valve.
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