Copper prices set to retest $10k/t near-term says Citi By Investing.com

Despite softening global manufacturing data, Citi analysts predict a near-term rebound for prices, reaching $10,000 per tonne again.

This bullish outlook hinges on anticipated policy support from China.

“We expect copper to retest $10k/t in the weeks ahead as we expect incremental China policy support for domestic property and grid investment at key policy meetings in mid-July,” states Citi.

This policy easing, particularly focused on grid upgrades for renewables, is expected to be announced during China’s Third Plenum meeting in mid-July.

Citi acknowledges a recent pullback in copper prices due to weaker manufacturing data globally. However, they believe this decline is temporary.

Encouragingly, they note that copper consumption continues to grow, driven by demand in the decarbonization sector, which offsets sluggish cyclical demand.

While cyclical demand might have softened in June, Citi says overall copper consumption for the first half of 2024 remains robust at around 4% year-over-year growth. China’s focus on electric vehicles and renewable energy is a key driver, contrasting with a slowdown in ex-China consumption.

The outlook for iron ore, however, is less optimistic. Citi expects volatility ahead of the Third Plenum, with downside risks outweighing upside potential.

They maintain their 0-3 month price target of $95 per tonne, citing weak Chinese steel demand and rising inventories. Steel production controls and a potential housing market glut further dampen the outlook for iron ore, according to Citi.