Copper Hits Record High: AI Demand Fuels Price Surge, Citi Bullish
Copper prices hit new records on Tuesday, driven by escalating demand from artificial intelligence (AI) data centers and the ongoing energy transition. The July-dated futures contract rose 1.09%, and the metal closed at a record $14,021 per metric ton on the London Metal Exchange. Citi strategist Charlie Massy-Collier attributed this surge to structural demand, noting that growth since 2022 is heavily linked to AI and energy needs. He views the recent breach above the $13,500 resistance level as confirmation of strong market fundamentals. Consequently, Citi advises investors to anticipate further gains, setting a bullish forecast target of $15,000 per metric ton.
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Copper prices reached new records on Tuesday, driven by surging demand from artificial intelligence (AI) data centers and the global energy transition, prompting Citi to advise investors to 'chase the move higher.'
Record Performance for Copper
Copper futures and physical metal both posted significant gains on Tuesday. The key metrics include:
Futures Market: The July-dated copper futures contract rose 1.09% to settle at 6.531.
LME Performance: Copper traded on the London Metal Exchange (LME) increased by 0.56%, closing at a record high of $14,021 per metric ton.
Year-to-Date Gains: Year-to-date, copper prices have risen 14.9%, with an additional 7.8% gain noted since the start of the Iran conflict.
Drivers Behind the Price Surge
Citi strategist Charlie Massy-Collier attributed the recent upward momentum to robust structural demand, primarily citing AI and energy needs. In a client note, Massy-Collier stated:
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"Practically all copper demand growth since 2022 has come from energy transition and AI related sources."
He also noted that a "more recent, channel for demand growth arises from strategic inventory stockpiling."
Citi's Outlook: Bullish on Further Gains
Despite the recent rally, Massy-Collier remains optimistic, viewing the break above the $13,500 threshold as confirmation of strong underlying demand.
He provided the following analysis:
Resistance Broken: The recent move above $13,500 signals that the market is confirming both structural and cyclical demand strength.
Forecast: Massy-Collier's bullish forecast suggests copper could reach $15,000 per metric ton, representing an approximate 7% increase from Tuesday's close.
Investment Strategy: The strategist plans to implement this view by purchasing an LME copper digital call option with an expiration date of August 5th.
