Citibank: Copper prices rise overheating, short-term risk of "peaking"

Citibank’s latest research report stated that after the latest round of gains, copper is “too hot and difficult to operate”. After the spot market rebounds, copper prices may fall. Aluminum and zinc are more optimistic in the first quarter of next year. However, the copper market will continue to face a decline in supply in the future, while the demand for copper in emerging industries remains strong.

Copper may "top" in the next few weeks, but the bulls may lose momentum because seasonal inventories will increase, Chinese imports will decrease, and supply will expand.

Citigroup analysts said that because the spot market indicators outside of China are generally still weak, and there is no sign of global supply shortage, it may be said that the increase in investment funds has boosted the rise in copper prices.

Of course, this does not mean that new funds entering the copper market cannot push copper prices to a higher level. As central banks release unprecedented liquidity to combat the impact of the epidemic, historical position data may no longer be relevant.

The bank recommends buying at a price of about US$7,000/ton or lower. The average price in 2021 is expected to be US$7,500/ton, and both 2022 and 2023 will be US$8,000/ton. By then, the market will return to a state of short supply.