As demand from artificial intelligence data centers drives copper to new records, Citi believes that there’s still more room for the metal to run. Copper’s July-dated futures notched a back-to-back record close on Tuesday, settling up 1.09% to 6.531. Year to date, copper prices have risen 14.9%, while they’ve added 7.8% alone since the start of the Iran war. Copper traded on the London Metal Exchange added 0.56% to $14,021 per metric ton on Tuesday, also closing at another record. In a Monday note to clients, Citi strategist Charlie Massy-Collier attributed this move higher to demand stemming from artificial intelligence data centers. “Practically all copper demand growth since 2022 has come from energy transition and AI related sources,” the strategist wrote. “Another, more recent, channel for demand growth arises from strategic inventory stockpiling, where Citi specialists have mapped out potential price implications of strategic inventory build scenarios.” Despite this recent runup, Massy-Collier believes that the metal’s recent move above the $13,500 threshold is confirmation that an improving macroeconomic backdrop can help drive prices even higher. The strategist’s bull-case forecast is $15,000 per metric ton, or approximately 7% above the metal’s Tuesday close. “We had been apprehensive about buying copper in recent weeks given the strength of resistance seen at $13,500. We are of the view that this resistance was at least in part a function of strong global visible inventory builds in Q1, indicating physical pushback at these prices despite the positive macro backdrop at the time,” Massy-Collier said. The strategist added: “As such, our interpretation of the recent break above $13,500 is one of the market confirming the strength of both the structural and cyclical demand setup, giving us conviction to chase the move higher.” Massy-Collier is implementing this trade through the purchase of an LME copper digital call option at 15,250, which expires on Aug. 5.
