Citigroup Lowers Copper Price Forecast Amid Concerns Over Trade Tariffs and Weak Stimulus

Due to the potential increase in U.S. trade tariffs following the incoming Trump administration and weaker-than-expected stimulus measures from China, demand for copper is likely to come under significant pressure. In response, Citigroup has lowered its short-term copper price forecast by 11%, anticipating that prices will fall from a previous forecast of $9,500 per ton to $8,500 per ton over the next three months. Since the end of September, copper prices have already declined by nearly 10%.

In their report, analysts at Citigroup stated, "Donald Trump’s election marks a significant turning point in global trade tariff policy. We are surprised that China has not eased its policies so far." The lack of strong economic stimulus from China, combined with the expected shift in U.S. trade policy, is creating a challenging environment for copper demand.

The strengthening of the U.S. dollar has also contributed to the decline in copper prices, as a stronger dollar typically exerts downward pressure on commodities priced in dollars. On Wednesday, November 13, the dollar index, which measures the strength of the dollar against a basket of other currencies, continued its recent gains, fueled by the U.S. election and stable inflation data for October.

A manager at Eagle Metal International Pte suggested that for copper demand to recover, China needs to implement more economic stimulus measures. The company is responsible for handling around 10% of China’s refined copper imports.

From a technical perspective, copper prices are expected to remain weak in the short term, with significant risks stemming from tightening overseas liquidity. On Wednesday, copper futures on the London Metal Exchange fell after the core Consumer Price Index (excluding food and energy costs) rose by 0.3% for the third consecutive month.