Citi Predicts Copper Price Surge to $10,000/t

Rise in Copper Prices to $10,000 per Tonne Due to China’s Support

Despite the recent decline in global manufacturing data, Citi analysts anticipate that copper prices will rebound in the near future, potentially reaching $10,000 per tonne once more. This optimistic projection is predicated on the expectation of policy support from China.

“We expect copper to retest $10k/t in the weeks ahead as we expect incremental China policy support for domestic property and grid investment at key policy meetings in mid-July,” according to Citigroup.

It is anticipated that this policy liberalization, which is notably focused on renewable energy infrastructure enhancements, will be disclosed at China’s Third Plenum meeting in mid-July.

Copper Prices Set to Rebound Amid Decarbonization Demand

Citi recognizes the recent decrease in copper prices as a result of the weakening of global manufacturing data. Nevertheless, they are of the opinion that this decline is only transient. They note that the stagnant cyclical demand is being counteracted by the increasing copper consumption, which is being led by demand in the decarbonization sector. This serves as a source of encouragement.

Despite the potential weakening of cyclical demand in June, Citi reports that overall copper consumption for the first half of 2024 remains robust at approximately 4% year-over-year growth. Although there is a decline in consumption outside of China, China’s emphasis on electric vehicles and renewable energy sources continues to be a substantial factor.

Volatile Iron Ore Prices Amid Weak Steel Demand

In contrast, the outlook for iron ore is less favorable. Citi anticipates volatility in the lead-up to the Third Plenum, with potential upside exceeding potential downside. They maintain a price target of $95 per tonne for the next three months, citing weak Chinese steel demand and increasing inventories. Steel production constraints and a potential housing market oversupply further undermine the outlook for iron ore.