Citi: Copper to Hold Near $13,000 on Supply Concerns

Citi's Copper Price Forecast

Citi projects that copper prices will find significant support around $13,000 per metric ton. The bank anticipates that physical dip-buying will maintain prices above a $12,000 per ton floor through the second quarter of 2026, even in a sharp risk sell-off scenario.

Current Market Dynamics

The forecast follows a period where benchmark three-month copper on the London Metal Exchange reached a three-month high. This price surge was partly attributed to an announcement from Freeport-McMoRan regarding a slight delay in production recovery at its Grasberg mine in Indonesia, which has tightened global supply expectations.

Economic and Geopolitical Factors

Despite the strong fundamentals, Citi highlights several potential headwinds. Risk-off sentiment stemming from U.S.-Iran tensions could exert downward pressure on prices. In its base case, the bank suggests that challenges from U.S. tariffs and inventory dynamics could bring copper down to $12,000 per ton by the fourth quarter of 2026. Conversely, a bull case scenario sees the metal potentially reaching $15,000 per metric ton by year-end if geopolitical tensions ease and demand from the energy transition sector accelerates.

Outlook and Key Levels

In summary, while supply constraints provide a strong foundation for copper prices, geopolitical and macroeconomic factors remain critical variables. The market will be closely watching the interplay between tight physical supply and broader risk sentiment. The $12,000 per ton level is seen as a crucial support zone.

FAQ

Q: What is Citi's primary price forecast for copper?
A: Citi expects copper to remain supported around $13,000 per metric ton, with a price floor of $12,000 through the second quarter of 2026.

Q: What are the main risks to the copper price?
A: The primary risks include risk-off sentiment from U.S.-Iran tensions, the impact of U.S. tariffs, and inventory dynamics.

Q: What could drive copper prices significantly higher?
A: A bull case scenario of $15,000 per ton is possible if geopolitical tensions de-escalate and demand related to the energy transition gains renewed momentum.

Source: Investing.com