Copper prices hit a new high, with Citigroup bullish on reaching $13,000 next

As copper prices rise to historic highs, Citigroup has released a bullish forecast that injects new momentum into the upward trend.

On Friday, Citigroup projected in its baseline scenario that due to U.S. stockpiling causing supply shortages in other regions, copper prices will average $13,000 per ton in the second quarter of next year. Currently, copper prices have risen 1.97% to $11,675 per ton, breaking through earlier highs set earlier this week.

A team of Citigroup analysts, including Max Layton, stated that multiple bullish factors will support the upward trend of copper prices until 2026. These catalysts include a more accommodative interest rate environment, U.S. fiscal expansion, European military restructuring, and energy transition. Citigroup predicts that global copper end-use consumption will grow by 2.5% next year.

Market expectations for U.S. import tariffs next year are driving metal flows to the U.S., leading to inventory losses in other major regions. According to informed sources, trader Mercuria Energy Group has placed orders for about $500 million worth of copper to be delivered from London Metal Exchange warehouses, possibly in preparation for supply tightness.

Bloomberg New Energy Finance reported on Thursday that the copper market will enter a structural shortage next year, and the supply gap will continue to widen over the next decade due to strong demand and constrained supply. As a key material for pipelines, power cables, and electric vehicles, copper prices have risen over 30% this year on the London Metal Exchange.

Wall Street Predictions Show Divergence

Despite Citigroup's bullish outlook, other analytical institutions are more conservative in their assessments of copper prices. A team of analysts from Macquarie Group, led by Peter Taylor, pointed out in a report on Thursday that while copper prices are expected to remain "volatile" and may reach new highs, prices above $11,000 per ton are unsustainable because the actual supply in the global market is not tight.

Goldman Sachs believes that in the short term, copper prices have deviated from fundamentals, and the global copper market will face a surplus of 500,000 tons in 2025, making it difficult for prices to stay above $11,000 in the short term. However, in the long term, copper remains Goldman Sachs' "favorite." The firm predicts that by 2026, copper prices will operate in the range of $10,000 to $11,000 per ton, with $10,000 forming a solid price floor. Goldman Sachs forecasts that a real supply shortage will begin to emerge from 2029, expecting that by 2035, copper prices on the London Metal Exchange will reach $15,000 per ton.

Macquarie's cautious view echoes Goldman Sachs' perspective earlier this week, as the latter also does not expect a copper shortage to occur before 2029.

Inventory Mismatch Intensifies Market Tension

Global exchange copper inventories have soared to over 656,000 tons, the highest level since 2018, with about 60% stored in warehouses under the U.S. Commodity Exchange. This inventory distribution pattern highlights the regional imbalance in the market JP Morgan defines the current situation as copper prices entering a "more volatile and aggressively bullish mid-stage," with the core logic being that the siphoning effect from the U.S. forces non-U.S. buyers to scramble for spot purchases, causing London Metal Exchange inventories to fall below the 100,000-ton threshold, triggering copper prices to enter an asymmetric bullish channel.

JP Morgan's "bullish endgame" prediction suggests that prices on the London Metal Exchange must rise significantly enough to reverse the U.S. copper arbitrage window, forcing resources to flow out of the U.S. to end this bull market driven by inventory mismatches.

Structural Demand Supports Long-Term Outlook

Citigroup emphasizes that the gradual improvement in macro and fundamental backgrounds supports its confidence in rising copper prices. A lower interest rate environment and U.S. fiscal expansion will become growth drivers, while Europe's military restructuring and energy transition will also boost demand.

Goldman's long-term bullish stance is similarly based on structural factors, including strong demand in the power grid, power infrastructure, artificial intelligence, and defense sectors, as well as the reality of constrained mining supply.

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