Goldman Sachs is still bullish on copper prices and expects to reach $11000 a tonne by the end of the year.

In a new research note, Goldman Sachs said that as the short-term headwinds receded, fundamentals suggested that demand would be further significantly boosted and that copper prices were "ready for the next round of gains".

Goldman Sachs said the copper concentrate market remained very tight, creating a bottleneck for China's primary metal production and strengthening its forecast for a severe shortage of 430000 tonnes of refining supply in the second half of the year.

Goldman Sachs expects a deficit of 200000 tonnes next year and halved its projected surplus in 2023 to 129000 tonnes, and said it would begin to have an open deficit after that.

When there is sufficient supply, the processing and refining costs (TC/RC) paid by miners to smelters to process concentrates into refined metals will rise, while when smelters are forced to compete for scarce materials, management and refining costs (TC/RC) will fall.

Although TC/RC has risen from an all-time low of just over $20 a tonne in April to about $45 a tonne in July, it is still low from more than $70 a tonne in June last year, and TC/RC soared to $130 in the 2010s.

Headwinds in China are receding and demand from the rest of the world is strong, as evidenced by the rise in physical copper premiums in the US to a five-year high.

Goldman also raised its long-term outlook for copper based on a significant increase in electric vehicle sales over the next decade.

The European Union recently proposed stricter emissions standards to reduce carbon emissions by 55% by 2030 and ban the sale of gasoline-powered cars by 2035.

Coupled with the popularity of cheaper LFP battery-powered cars, analysts' forecasts for electric vehicle sales have risen by 30% to 3 million by 2025. By 2030, electric vehicle sales will reach 32 million a year.

Goldman now expects average annual additional copper demand from electric vehicles to be about 200kt over the next decade, meaning green copper demand will be 2.7 million tonnes in 2025 and 5.8 million tonnes in 2030, accounting for 18 per cent of global copper demand.

In the report, Goldman Sachs reiterated its bullish forecast for copper prices of $11000 a tonne by the end of the year (just below $5 a pound) and $11500 a tonne by this time next year.