Citi: Copper Prices May Hit $15,000-$16,000 per Ton in Coming Weeks Due to Chinese Allocation, but Sustained Rally Confidence is Low

Copper prices have surged significantly, briefly surpassing the recent target price of $14,000 per ton. Chinese investors, driven by the momentum of rising precious metal prices and a weak US dollar, have generated buying activity that far outweighs the weak physical fundamentals and selling by investors outside of China. Citi expresses a lack of confidence in the near-term trajectory of copper prices.

Over the next two weeks, it is highly likely that Chinese investors will further allocate or rotate funds into base metals as a hedge against rising precious metal prices. Against the backdrop of parabolic rises in silver and gold prices, a surge in copper prices to $15,000-$16,000 per ton is not an impossible scenario.

However, Citi's base case expectation is that copper prices will remain around $13,000 per ton in 2026, even as physical market resistance to high metal prices intensifies, a level deemed sufficient to achieve market supply-demand balance this year. The bank stated that while it would not be surprised to see copper reach $15,000-$16,000 per ton, its confidence in the sustainability of such buying is not high.

If such a rally were to be sustained, it is more likely to occur in the short term before the Chinese New Year, which could act as a trigger for profit-taking. Citi further indicated that in recent years, global electric vehicle (EV) sales growth has moderated due to slower-than-expected adoption rates in markets outside China.

Frequent policy changes have adversely affected non-Chinese markets, and although the Chinese market has provided some offset in recent years, early signs of saturation and slowing growth are emerging in China's domestic EV market, the world's largest. Exports are expected to benefit from anticipated policy shifts in Europe, specifically an increased openness to Chinese auto imports.

Amid this overall slowdown in demand growth, the related growth for energy transition materials like copper and battery materials such as lithium, nickel, and cobalt is expected to be constrained.