Citigroup has raised its short-term copper price target to $14,000 per ton, but warns the rally may be nearing its end, suggesting January could become the peak for the entire year of 2026. Analysts point out that prices above $13,000 will stimulate increased scrap copper recycling, pushing the market towards balance; unless new catalysts emerge, such as a significant weakening of the US dollar or unexpected supply shocks, copper prices are expected to retreat to $13,000.
The recent strong rebound in copper prices, which broke through key resistance levels, has prompted Citigroup to raise its short-term price target. However, the bank warns in its latest report that the momentum for this rally may soon be exhausted, and January might become the price peak for the full year of 2026, after which the market could face the risk of a pullback.
According to tracking of trading desks, a research report released by Citigroup on January 6th indicates that copper's rapid price surge has already exceeded the bank's previously set 0-3 month target of $12,000 per ton and 6-12 month target of $13,000 per ton from its 2026 annual outlook. Based on market momentum, positioning space, and US tariff dynamics, Citigroup has decided to "tactically" maintain a bullish stance, raising its 0-3 month target price to $14,000 per ton.
However, this optimism is not without reservations. The analyst team, led by Tom Mulqueen and Maximilian J Layton, candidly stated:
"Although we have raised our short-term target, our bullish conviction at the current price is far lower than it was in December; January could very well be the price high for 2026. Unless new catalysts emerge to realize our $15,000 per ton bull scenario, we expect prices to eventually retreat to a more sustainable level of $13,000 per ton."
One of the core drivers of this rally is arbitrage activity and tariff expectations surrounding the US market. Bill of lading data shows a surge in US copper imports in late December to multi-year highs, with COMEX copper maintaining a premium over LME copper. The market is pricing in tariff risks expected to last until June, which supports pricing and spreads in non-US regions. Citigroup's base case assumption is that, while the market is trading on tariff risks, substantial US tariffs on refined copper may not ultimately materialize, or could be mitigated through exemptions for partners like Chile; but until then, this uncertainty remains fuel for the bulls.
For fundamental investors, the supply-side response cannot be ignored. Citigroup warns that the current price level of $13,000 per ton is already sufficient to stimulate an increase in scrap copper recycling (as well as substitution effects), which will lead to a balanced global physical market in 2026:
"We believe that any further gains above $13,000 per ton will ultimately be given back by the market. High prices risk triggering bearish physical signals, such as increased visibility and availability of inventories."
Although the base case forecast is a pullback, Citigroup also retains a 20% probability "bull scenario" where copper prices surge towards $15,000 per ton. But this would require a perfect alignment of macro factors: aggressive market pricing of a "very soft landing" for the US economy, further weakening of the US dollar, a cyclical growth recovery spurred by more substantial Federal Reserve rate cuts, or an unexpected shock on the supply side (such as mine supply issues or a sluggish response from scrap copper to high prices). Until these new catalysts appear, however, investors should perhaps be wary that January's exuberance may mark the year's peak.
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