Copper, often seen as a bellwether for the global economy, has held up better than expected so far this year...but that may be about to change.
According to Citi’s latest Metal Matters note, investors should hold off on buying until one of three things happens: The US Federal Reserve changes course, President Trump eases back on tariffs, or China steps in with stimulus.
Until then, Citi is urging caution.
Through the first quarter of 2025, copper demand (especially from China) showed surprising strength.
Citi’s consumption tracker highlights resilience in end-use activity, likely helped by manufacturers stockpiling supplies ahead of expected US tariff hikes. But that demand, the bank warns, is likely to fade fast now that the tariffs have come into force.
From 2 April, the US began imposing a sweeping new set of reciprocal tariffs, including duties on imports from China, the EU, and other major trading partners.
These have raised costs and injected a fresh dose of uncertainty into global manufacturing.
Citi sees this as a clear inflexion point for copper, predicting that consumption growth will weaken in the second quarter as the impact of higher trade barriers filters through supply chains.
At the same time, the market is still heavily positioned for a bullish outcome, meaning any disappointment in data or policy could trigger a sharp unwind in copper prices. Citi is now forecasting copper to fall to $8,500 a tonne in the second quarter - down from recent highs - with risks "heavily skewed to the downside" if global growth slows more than expected.
The underlying issue is timing. As Citi puts it, “don’t buy until the Fed, President Trump, or China ‘put’ kicks in”.
That is, unless one of these powerful players acts to shore up confidence - through interest rate cuts, tariff relief, or fresh stimulus - copper may struggle to find a floor.
For now, March’s manufacturing data remains mixed, with softness in several regions suggesting the early-year strength may already be ebbing. And with sentiment in the sector fragile, any further disruption could tip the balance quickly.
In short: the copper rally is on pause. And unless policymakers act soon, the metal’s reputation as a global growth proxy might come with more downside than investors are ready for.