South32 Ltd (LSE:S32, ASX:S32, OTC:SHTLF) is Citi's preferred mining stock as the bank becomes more bullish on copper and aluminium prices, while Glencore PLC (LSE:GLEN) is its favoured way to play the copper theme among the major diversified miners.
The US bank has raised its long-term copper forecasts and now expects prices to reach $15,000 a tonne within the next year, versus a current LME price below $13,800.
Citi's view is based on support from supply shortages extending into 2027 and 2028.
That outlook has prompted a series of target price upgrades across the sector. Citi increased its target price on South32 to 320p from 300p, while lifting BHP Group Ltd (LSE:BHP, ASX:BHP) to £35 from £29 and Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) to £81 from £76.
Versus BHP or Rio, the bank's analysts argued that Glencore "among global diversifieds as better exposure to copper upside", though Anglo American PLC (LSE:AAL) and Antofagasta PLC (LSE:ANTO) are viewed by investors as the FTSE 100 miners to buy for copper exposure.
Citi maintained 'neutral' ratings on BHP and Rio Tinto, saying the benefits from higher copper prices are partly offset by a more subdued outlook for iron ore, which remains a major earnings driver for both groups.
By contrast, South32 continues to stand out because of its exposure to both copper and aluminium, where Citi also sees upside. The company's Hermosa project in Arizona was highlighted as a source of long-term structural growth.
Citi said consensus earnings forecasts for South32 still have room to move higher as analysts incorporate stronger assumptions for copper and aluminium prices.
The bank expects the company to be one of the biggest beneficiaries of commodity price upgrades over the next two years.
