Citigroup has expressed a bullish outlook on copper prices in the near term, projecting that they will climb to $14,000 per ton within the next three months. While precise price movements are challenging to predict, the bank believes short-term risk-reward dynamics lean favorably toward the upside. It anticipates that investors will take advantage of price dips to accumulate positions, and post-Lunar New Year inventory replenishment in Chinese supply chains will further support copper prices.
According to Citi, downside risks for copper are limited, whereas upside potential appears more promising. This optimism stems from investor confidence in cyclical growth for copper, as well as strategic positioning in physical assets driven by trends such as de-dollarization, currency depreciation, and resource security concerns. Additional supply disruptions could also contribute to upward price pressure.
The bank has maintained its average copper price forecast for the year at $13,000 per ton, noting that this level should keep the global physical copper market broadly balanced in 2024. Tracking data from Citi indicates that despite weak December figures, copper end-use consumption likely grew 3.3% year-over-year last year, with a projected increase of 2.3% this year. This growth is largely attributed to a moderate recovery in cyclical copper demand expected later in the year, coupled with rising consumption linked to artificial intelligence, which should offset slower growth in power generation and electric vehicle sectors.
Citi's data also suggests that energy transition-related copper consumption surged approximately 19% year-over-year in the previous year, while cyclical consumption increased by about 1%. Although manufacturing purchasing managers' indexes have not yet shown clear signs of improved confidence, the bank expects manufacturing sentiment to strengthen this year as the Federal Reserve begins cutting interest rates and trade tariff tensions ease.
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