Citi Sees Copper Prices Soaring on Tightening Chinese Markets

Copper prices are expected to strengthen in the coming months due to tightening Chinese markets and global supply pressures, according to analysts at Citi. The bank has maintained a bullish outlook on copper, targeting US$14,500 a tonne over the next three months and US$15,000 by year-end.

Citi notes that China's physical market is tightening, with falling inventories outside of the US, particularly in China, and strengthening Chinese import demand indicating underlying physical constraints. The bank also points to global mine supply remaining under pressure, while the scrap response to higher prices has been softer than expected.

Additionally, RBC Capital Markets agrees that copper prices are likely to rise, noting that copper rose 1.3% last week and copper equities gained 6%. In particular, the Yangshan import premium has surged from US$45 a tonne at the beginning of this year to roughly US$115-119, reflecting increased competition among Chinese buyers for overseas metal.