Citi cuts copper price forecast, says US tariffs, China weakness to hit demand

Investing.com -- Citi Research in a note dated Wednesday has revised down its copper price forecast for the short term, signaling that ongoing trade tensions between the United States and China, coupled with weaker-than-expected economic growth in China, are likely to dampen global demand for copper. 

This reassessment projects copper prices falling to $8,500 per metric ton in the near term, down from an earlier forecast of $9,500 per metric ton, with an average price of $9,000 per metric ton for the fourth quarter of 2024.

The outlook reflects Citi’s concerns over the resilience of global manufacturing demand, a critical driver for copper consumption. 

The U.S., under potential policy changes, could heighten tariffs on Chinese imports, creating additional stress on copper demand by inflating costs and possibly reducing manufacturing output. 

This coincides with a notable hesitance from China in announcing more substantial economic stimulus, despite expectations. 

The limited scale of China’s recent economic measures has surprised some analysts, weakening confidence in an imminent recovery for China’s manufacturing sector—particularly given its reliance on global trade and export demand.

In recent months, investor positioning in copper and other base metals has also seen heightened volatility. Net long positions, which represent bullish bets on copper prices, remain elevated. 

However, these positions are vulnerable to declines if the outlook remains clouded by trade policy uncertainty and unsteady economic signals. 

Citi points to a disconnect between current market sentiment in manufacturing and copper market positioning, suggesting that further reduction in long positions could occur as traders adjust expectations in light of an uncertain manufacturing recovery in 2025.

The overall forecast for copper and base metals indicates pressures persisting until the end of the year, especially if anticipated U.S. tariffs further stress China’s economic conditions. 

While longer-term, Citi still anticipates a medium-term recovery for copper prices driven by decarbonization demand—such as for electric vehicles and renewable energy—trade and economic headwinds may delay a more robust price resurgence until late 2025.

Source: Investing.com