Goldman Sachs Energy, Utilities & Mining Weekly Pulse: New Copper, Steel, and SMID Refining Coverage Feedback Mostly Positive

Overview

This is a Goldman Sachs equity research weekly pulse report on energy, utilities, and mining, focused on investor feedback after the recent launch of metals & mining and SMID refining coverage. The report covers U.S. steel, copper, refining, oil and gas E&P, integrated energy, energy services, utilities, pipelines/MLPs, clean technology, LNG, solar, and uranium themes. Overall, investors are more positive on U.S. steel and parts of the refining complex, but remain cautious on single-name risk/reward, valuation entry points, and the path to realization after 2026.

Core views

Key views include: First, U.S. steel has benefited from tariffs, weaker imports, and price increases, which have driven market de-globalization; investors expect EBITDA over the next three years may exceed current estimates, with NUE receiving the strongest endorsement. Second, the Buy case for FCX rests on long-term copper upside and asset-level margin convexity, but the pace of Grasberg's return to 80%-85% capacity, 2026 diesel costs, and North American cost cuts remain key uncertainties. Third, West Coast refining is supported by tight supply/demand, a tight Asia/Singapore backdrop, refinery shutdowns at Benicia/Rodeo/Martinez, and insufficient incremental pipeline capacity, but PARR's share price has already risen 72% year to date, making the entry point the main point of contention. Fourth, DK was upgraded to Buy; RIN balances and potential small-refinery exemptions create upside, but RIN price volatility, narrowing Brent-Midland spreads, and the refining segment's profitability are still being questioned. Fifth, discussion in utilities, LNG, solar, oilfield services, and pipelines is centered more on policy, geopolitical disruptions, capex, earnings revisions, and supply-demand bottlenecks.

Analysis framework

The report uses an investor-inbound and market-dialogue-driven research approach, combining new coverage ratings, valuation frameworks, commodity price assumptions, supply/demand models, regulatory changes, and company-specific catalysts to assess risk/reward across subsectors and individual names. Key analytical tools include EV/EBITDA valuation, SOTP valuation, the West Coast product supply/demand model, the RIN bank model, free cash flow yield, P/E relative to the S&P, WTI versus natural gas futures curve comparisons, and scenario-based investor feedback.

Methodology notes

• equity_valuationEV/EBITDA

  Valuation via cycle EV/EBITDA

  Metals and steel companies such as FCX, NUE, and CLF are valued using average 2026-2028 EBITDA and different multiples, with M&A value added for some companies.

• equity_valuationSOTP

  Sum-of-the-parts valuation

  DK's target price is based on 85% SOTP weight and 15% acquisition scenario weight to reflect the different contributions from refining, RINs, and potential asset value.

• industry_modelWest Coast Product Supply/Demand Model

  West Coast refined products supply/demand model

  The model is used to assess the structural tightness of the West Coast refining market amid a tight Asia/Singapore backdrop, refinery closures, and insufficient incremental pipeline capacity.

• industry_modelRIN Bank Model

  RIN balance model

  This model is used to analyze the impact of RIN prices, compliance credit balances, and small-refinery exemptions on SMID refiners, especially DK's risk/reward profile.

• market_contextInvestor Inbound Feedback

  Investor inbound feedback

  The report relies heavily on investor calls and meeting discussions to identify the issues the market cares about most, areas of consensus and disagreement, buy-side concerns, and potential catalysts.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• FCX

  Copper miner; the report assigns a Buy rating and a 12-month target price of $70.

  Strengths

  Long-term commodity price upside, asset-level margin convexity, and potential multiple re-rating after Grasberg restarts.

  Weaknesses

  Whether Grasberg can reach 85% capacity by end-2026 remains uncertain, and North American cost reductions still need to be observed.

  Comparison

  Compared with other steel and metals names, it has more direct exposure to copper prices and mine-operating progress.

  Risks

  Copper prices below expectations, higher energy costs, labor strikes in Indonesia and South America, mine disruptions, capex above expectations, and cost cuts below expectations.

• NUE

  U.S. steel company; the report assigns a Buy rating and a 12-month target price of $210.

  Strengths

  Benefits from tariffs, weaker imports, higher steel prices, and margin expansion among EAF producers.

  Weaknesses

  Its valuation appeal depends on price increases and the realization of future EBITDA upgrades.

  Comparison

  Investor views on NUE are relatively unified, and it is more widely accepted than CLF, which faces more single-name controversy.

  Risks

  Scrap costs above expectations, tariff declines, added domestic capacity, and slower-than-expected economic growth.

• CLF

  U.S. steel company; the report assigns a Neutral rating and a 12-month target price of $9.

  Strengths

  If imports keep falling and volume/prices rise, that could ease liquidity pressure and support debt reduction.

  Weaknesses

  POSCO partnership delays, high leverage, cash pressure, and near-term liquidity needs.

  Comparison

  Compared with NUE and CMC, CLF draws more investor skepticism.

  Risks

  Market share shifts, weaker-than-expected pricing, increased competition, deal risk, and potential financing pressure.

• PARR

  SMID refining name; the report says it benefits from a tight West Coast product market and was upgraded to Buy.

  Strengths

  Its Hawaii and Washington assets benefit from higher West Coast/Singapore margins and structural supply contraction.

  Weaknesses

  The share price is already up 72% year to date, so the entry point is the main concern.

  Comparison

  Its West Coast exposure makes it more leveraged to regional supply/demand tightness than other refiners.

  Risks

  High Middle East, Alaska, and Brent-linked crude prices could compress Pacific capture rates.

• DK

  SMID refining name; the report assigns a Buy rating and a 6-month target price of $55.

  Strengths

  The RIN bank model, small-refinery exemptions, and SOTP risk/reward all provide upside; higher diesel yield and the company's optimization plan also support earnings improvement.

  Weaknesses

  Investors still doubt whether high RIN prices can persist and whether the core refining business is truly profitable.

  Comparison

  Compared with PARR's West Coast supply/demand thesis, DK depends more on RINs and a rerating of the sum-of-the-parts valuation.

  Risks

  Sharp RIN price volatility, narrowing Brent-Midland spreads, refining margins, execution, and capital allocation.

• PCG/EIX/SRE

  California regulated utilities, with investors focused on the CEA SB 254 wildfire reform study.

  Strengths

  Liability reform, community plans, better insurance availability, and hard liability caps could improve the risk premium.

  Weaknesses

  The later legislative text and filing timing remain uncertain.

  Comparison

  PCG reacted more positively because of valuation and recent performance; its weekly gain was higher than EIX and SRE.

  Risks

  No legislative action, a delay to the 2027 session, wildfire liability and insurance mechanism uncertainty.

• AEP/XEL

  Regulated utilities, with investors focused on capex plans and earnings revisions.

  Strengths

  AEP large-load demand and transmission opportunities, XEL's SPP transmission opportunity, Google data-center deal, and potential upside from RFPs.

  Weaknesses

  XEL remains exposed to wildfire risks in CO and TX and to litigation in Texas.

  Comparison

  Both are seen as companies that may offer capex and EPS growth upside clues during the 1Q earnings season.

  Risks

  Wildfire risk, litigation, capex execution, regulation, and the rate environment.

Key data

• Report date2026-04-10 4:09PM EDTPublication time of the Goldman Sachs equity research report.
• FCX rating and target priceBuy; 12-month price target $70The target price is based on 85% cycle EV/EBITDA valuation and 15% M&A value.
• NUE rating and target priceBuy; 12-month price target $210Based on an 8.4x EV/EBITDA multiple applied to average 2026-2028 EBITDA.
• CLF rating and target priceNeutral; 12-month price target $9Valuation includes 85% fundamental weight and 15% M&A weight.
• DK rating and target priceBuy; 6-month price target $55Based on 85% SOTP weight and 15% M&A weight.
• PARR YTD gain+72% YTDThe report says that after PARR's sharp share-price gains, the main investor debate is the entry point.
• EXE YTD performance-10% vs larger-cap gas E&P peer average +16%Investors are focusing on the mean-reversion opportunity and business strategy after EXE's relative underperformance.
• FANG YTD performance+25% vs oily E&P peer average +37%Some investors think FANG offers a more attractive risk/reward after lagging peers.
• California utilities weekly performancePCG +5.5%; EIX +3%; SRE +1%Affected by discussion of the CEA SB 254 wildfire risk study and potential liability reform.
• AEP large-load opportunity56 GW through 2030; incremental capex opportunity $5-$8bnInvestors are focused on capex and EPS upside.
• PUMP announced capacityApprox. 1 GW by year-end 2030; approx. $300,000 per MW earnings expectationInvestors are discussing Behind-the-Meter business valuation and the newly announced capacity.
• VG spot exposureApprox. 30% of 2026 capacity; approx. 45% average through the rest of the decadeAfter LNG prices pulled back, investors are focused on VG financing and spot exposure.

Impact & implications

Implications for portfolios: opportunities in energy resources are expanding from simple commodity-price upside to structural supply/demand, policy, and company-specific execution. Supply constraints in U.S. steel and West Coast refining could drive earnings upgrades; FCX and the copper theme offer cyclical upside and asset leverage, but near-term restart and cost risks temper the urge to chase. DK and PARR have catalysts, but investors must absorb RIN volatility and valuation debate. In utilities, California wildfire reform and upside to AEP/XEL capex could support valuations, but legislative timing, interest rates, and wildfire litigation remain key variables.

Risks

• A slower-than-expected Grasberg restart, missed capacity targets, or weaker cost control could weigh on FCX rerating.
• If steel price increases do not hold, or if tariffs, imports, and domestic capacity dynamics reverse, the earnings-upgrade case for NUE, CMC, and CLF could weaken.
• PARR and some refining stocks have already rerated sharply, making the entry point and valuation margin of safety key risks.
• RIN prices are highly volatile, and the market may struggle to continue pricing in DK's upside case.
• Physical crude prices, Brent-Midland spreads, and capture-rate changes could compress refining profits.
• Middle East disruptions, traffic through the Strait of Hormuz, LNG spot prices, and changes in global gas prices will affect expectations for LNG, oilfield services, and upstream names.
• If California wildfire reform is delayed or makes no meaningful progress, recent outperformance by CA IOUs may prove unsustainable in the near term.
• Rising rates or changes in the real-rate environment could affect utilities' valuation premium versus the S&P.
• The solar industry faces demand risk from PFE/FEOC guidance, a tight tax-equity market, and the phase-down of residential solar subsidies.

What to watch

• Whether FCX's Grasberg can get close to 80%-85% capacity by end-2026, and the progress of North American cost-cutting measures.
• U.S. steel import data, tariff enforcement, HRC-scrap spreads, and earnings estimate revisions for NUE/CMC/CLF.
• PARR's West Coast margin, Pacific crude capture rates, and the entry point after any share-price pullback.
• DK's RIN prices, RIN bank balances, small-refinery exemptions, and the contribution of the company's optimization plan to profits.
• 1Q26 results for refining and integrated energy companies, especially commentary from VLO, PSX, XOM, and CVX on maintenance, Middle East disruptions, and downstream margins.
• The follow-up legislative text for CEA SB 254, filing timing, and the path to California IOU liability-cap reform.
• AEP large-load updates, incremental capex buckets, and XEL's progress in SPP, Google data centers, and RFPs.
• LNG spot prices, transit through Hormuz, VG's financing outlook, commercialization of LNG Corpus Christi Train 4, and GLNG's strategic review.
• Final solar PFE/FEOC guidance, the tax-equity market, residential solar permitting trends, and the demand lift from European power prices.