Copper Prices Surge to 11-Month Highs as Supply Tightens
Analysts Bullish on Copper Outlook
Copper prices continue their upward trajectory, reaching 11-month highs as supply constraints tighten, according to analysts at Citi. The red metal is poised for further gains as demand remains robust amidst supply disruptions.
China’s Impact on Copper Prices
The surge in copper prices follows reports of potential output cuts by China’s major copper smelters, hinting at a looming supply deficit in the refined copper market. Persistent mining disruptions in Chile and Peru, the top copper ore producers globally, further exacerbate the supply crunch.
Market Performance and Projections
London Metal Exchange witnessed a significant surge, with copper prices hitting $8,977.0 per metric ton, marking the highest level since April 2023. Additionally, one-month U.S. prices reached a near one-year peak at $4.0810 per pound, showcasing the metal’s bullish trend.
Citi’s Positive Outlook
Citi analysts are optimistic about copper’s prospects, emphasizing the importance of the metal’s breakthrough above $8,600 per tonne. They maintain an overweight position on copper, with a long position on a June 2024 $9000/$9500 call spread, anticipating further upside.
Factors Driving Demand
Besides supply constraints, Citi analysts foresee an uptick in copper demand fueled by improving global manufacturing conditions and the potential impact of a burgeoning equity bubble. China’s supportive stance towards industries linked to metal demand, particularly automobiles, also contributes to the positive outlook.
