Copper Price Forecast Revised Down by Citi Research Due to Trade Tensions and Weak Economic Growth
In a recent note, Citi Research has revised its price forecast for copper in the short term, citing ongoing trade tensions between the United States and China, as well as weaker-than-expected economic growth in China. This revision projects copper prices to fall 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 crucial driver for copper consumption. The potential policy changes in the U.S., including heightened tariffs on Chinese imports, could further stress copper demand by inflating costs and potentially reducing manufacturing output. Additionally, China’s limited economic stimulus measures have surprised some analysts, casting doubt on an imminent recovery for China’s manufacturing sector.
Investor positioning in copper and other base metals has also seen increased volatility in recent months. While net long positions, representing bullish bets on copper prices, remain elevated, they are susceptible to declines amidst trade policy uncertainty and unstable economic signals. Citi highlights a disconnect between current market sentiment in manufacturing and copper market positioning, suggesting further reduction in long positions as traders adjust their expectations in light of an uncertain manufacturing recovery in 2025.
The overall forecast for copper and base metals indicates persistent pressures until the end of the year, particularly if anticipated U.S. tariffs continue to impact China’s economic conditions. Although Citi anticipates a medium-term recovery for copper prices driven by decarbonization demand, such as for electric vehicles and renewable energy, trade and economic challenges may delay a more robust price resurgence until late 2025.
Analysis:
The revised price forecast for copper by Citi Research underscores the impact of trade tensions and weak economic growth on global demand for the metal. Investors should be cautious of the potential decline in copper prices in the near term, as uncertainties in trade policies and economic signals continue to cloud the outlook. The manufacturing sector, a key driver of copper consumption, remains vulnerable to further disruptions, highlighting the need for a strategic approach to investment decisions in the base metals market.