(Dec 5): Copper rose to a record, given fresh impetus by a bullish price outlook from Citigroup Inc as traders anticipate a shortage caused by stockpiling in the US.
The industrial metal rose as much as 1.9% to US$11,662 ($15,096) a ton, surpassing a previous high set earlier this week. Copper will average US$13,000 in the second quarter as inventories build in the US, creating a deficit elsewhere, according to the base scenario presented by Citi analysts in a note on Friday.
“We have conviction in copper upside through 2026 supported by multiple bullish catalysts, including an incrementally constructive fundamental and macro backdrop,” the Citi analysts including Max Layton said. They forecast a 2.5% rise in global end-use consumption next year, citing a lower interest-rate environment and fiscal expansion in the US as drivers of growth, as well as European rearmament and the energy transition.
Copper, a key component in pipes, power cables and electric vehicles, has gained more than 30% on the London Metal Exchange (LME) this year. The rally has accelerated in recent weeks as concerns grow of an exodus of metal to America in anticipation of import tariffs next year — in turn, draining inventories in other key locations. Possibly preparing for such a crunch, trading house Mercuria Energy Group Ltd ordered about US$500 million of copper for withdrawal from LME warehouses, according to people familiar with the matter.
The copper market is set to enter a structural deficit next year, with the shortfall widening over the next decade on robust demand and constrained supply, BloombergNEF said in a report on Thursday.
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Other analysts, however, have issued more conservative outlooks for copper in recent days. While the metal is expected to remain “volatile” and could easily reach new highs, prices above US$11,000 a ton are not sustainable as the global market is not physically tight, Macquarie Group analysts led by Peter Taylor said in a note on Thursday.
Copper inventories at global exchanges have spiked to over 656,000 tons, the highest since 2018, with around 60% held in warehouses under Comex in the US. Macquarie’s view echoed caution from Goldman Sachs Group Inc earlier this week, which doesn’t expect a copper shortage until 2029.
Copper had risen 1.8% to US$11,650.50 a ton on the LME as of 1.57pm in Shanghai on Friday. Other metals were also higher, with aluminium gaining 0.3% to head for its highest close since 2022. Zinc gained 0.6%
Uploaded by Tham Yek Lee
