Goldman Sachs Sees Copper Imports Frontrunning Tariffs As FCX Positions To Benefit (UPDATED)

Editor’s Note: The headline has been updated for clarity.

Goldman Sachs forecasts a surge in U.S. copper imports soon, driven by expectations of tariffs from President Donald Trump's administration.

Per Reuters' report, the investment bank expects a 25% duty on copper imports by year's end, incentivizing stockpiling to frontrun the legislative. As a result, U.S. net copper imports could surge by 50-100%, adding between 200,000 to 300,000 metric tons to domestic inventories by Q3.

If this projection materializes, U.S. copper stockpiles could swell from 95,000 tons to as much as 400,000 tons or around half of global reported inventories – leaving the international market at historically low inventory levels.

For 2025, Goldman sees a 180,000-ton global copper deficit as growing demand for electrification, economic stimulus measures in China, and slow mine growth materialize. The bank sees the supply imbalance more pronounced in the second half of the year as a catalyst for higher prices.

"We maintain our forecast that the LME three-month price will average $10,200 per ton in Q3 2024 and see the impact of inventory dislocation predominantly in timespreads," the bank noted. Current three-month copper contracts on the London Metal Exchange were trading at $9,528.50 per ton as of Wednesday morning.

The largest U.S. copper producer, Freeport-McMoRan FCX, could benefit from this scenario, particularly if copper is classified as a critical mineral.

In a recent interview, CEO Kathleen Quirk expressed optimism that the Trump administration could make this move soon, unlocking the federal tax incentives to support domestic production.

"Having the incentives and clarity around those would be a big plus for the domestic copper industry," Quirk said. Such a designation would enable Freeport to claim more than $500 million annually in tax credits tied to the Inflation Reduction Act.

Freeport-McMoRan operates seven copper mines across the U.S. and one of two domestic copper smelters. The firm doesn't export any domestically produced copper, making it a key supplier in any scenario restricting imports.

However, production costs in the U.S. are higher than in Freeport's international operations due to lower ore grades, making policy support a crucial factor.

Per the latest guidance, the company expects its U.S. copper production to increase by 8% in 2025, with further growth in subsequent years. Opportunities include doubling the concentrator capacity at its Bagdad operation in Arizona, which could add 200-250 million pounds of copper annually.

Quirk also hinted at a possible return to the Democratic Republic of Congo, where Freeport previously owned the Kisanfu copper-cobalt project before selling it to China Molybdenum in 2020. "We would be interested in going back for the right opportunity," she said, adding that Freeport would seek to be the operator of any project if it re-enters the DRC.

Price Watch: Freeport-McMoRan has declined 5.28% year-to-date. The stock is up 1.56% to $36.44 premarket at the last check on Wednesday.

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