Copper prices have been buoyant, but demand is about to flag, says influential investment bank

Citi forecasts a slowdown in copper demand growth in Q3 2025, projecting a potential 10% price decline from current spot levels. While April saw a 6.1% year-on-year increase driven by Chinese solar projects and EV growth, rising US tariffs and the end of China's solar installation surge are expected to create headwinds. Despite the anticipated price easing, Citi views this as a buying opportunity for medium-term investors.

Analysis

Citigroup's latest research note signals a potential moderation in copper demand growth through the third quarter of 2025, contributing to a moderately negative sentiment surrounding the commodity. While April's copper consumption saw a robust 6.1% year-on-year increase, primarily driven by early demand for solar projects and electric vehicle expansion in China, these tailwinds are anticipated to diminish. Citi highlights rising US tariffs and the conclusion of China's intensive solar installation phase as key factors expected to dampen demand. This outlook is further contextualized by a global manufacturing sentiment that slipped into contraction in May, reflecting increased business uncertainty, particularly concerning the impact of US trade policies. Consequently, Citi projects that base metal prices, including copper, could experience an approximate 10% decline from current spot levels during Q3. Despite this near-term bearish projection, which is reflected in negative sentiment for copper-related instruments like CPER and COPX, Citi suggests that such a dip could present a strategic entry point for medium-term investors.

Key Decisions for Investors

• Investors should anticipate potential downward pressure on copper prices and related equities (e.g., CPER, COPX) in Q3 2025 due to forecasted demand slowdown and rising US tariffs.
• Consider the projected 10% price correction as a potential buying opportunity for medium-term copper exposure, aligning with Citi's outlook.
• Closely monitor developments in US trade policy, Chinese demand indicators, and global manufacturing sentiment, as these will be critical drivers for copper's price trajectory beyond Q3.
• Note the neutral sentiment for Citigroup (C) itself, distinguishing its analytical call from its own direct market exposure in this context.