Copper prices have strongly broken through $13,000, pushing up the "short-term target," but this investment bank believes that January could be the peak for the entire year!

Copper prices have recently rebounded strongly and broken through key resistance levels, prompting Citigroup to raise its short-term price targets. However, the bank warned in its latest report that the momentum of this rally may soon run out, with January potentially becoming the price peak for the entire year of 2026, after which the market may face a risk of decline.

According to the Wind Trading Desk, a research report released by Citigroup on January 6 shows that the rapid rise in copper prices has surpassed the bank's previously set target prices of USD 12,000 per ton for 0-3 months and USD 13,000 per ton for 6-12 months in its 2026 annual outlook. Based on market momentum, positioning space, and U.S. tariff dynamics, Citigroup has decided to "tactically" remain bullish and raised the 0-3 month target price to USD 14,000 per ton.

However, this optimism is not without reservations. The analyst team led by Tom Mulqueen and Maximilian J Layton admitted:

“Although we have raised our short-term targets, our confidence in the current price outlook is much lower than in December; January may be the price peak for 2026. Unless new catalysts emerge to realize our bullish scenario of USD 15,000 per ton, we expect prices to eventually retreat to a more sustainable level of USD 13,000 per ton.”

One of the core drivers of this price surge is the arbitrage activities and tariff expectations surrounding the U.S. market. Bill of lading data shows that U.S. copper imports surged to multi-year highs in late December, with COMEX copper continuing to trade at a premium to LME copper. The market is pricing in tariff risks that will last until June, which supports pricing and spreads outside the U.S. Citigroup's basic assumption is that while the market is trading on tariff risks, the U.S. refined copper tariffs may not materialize significantly, or may be alleviated through exemptions for partners like Chile, but until then, this uncertainty remains fuel for the bulls.

For fundamental investors, the supply-side response cannot be ignored. Citigroup warns that the current price level of USD 13,000 per ton is already sufficient to stimulate an increase in scrap copper recycling (and substitution effects), which will lead to a more balanced global physical market by 2026:

“We believe that any further increase above USD 13,000 per ton will ultimately be given back by the market. High prices could trigger bearish physical signals, such as increased inventory visibility and availability.”

While the baseline forecast is a pullback, Citigroup also retains a 20% probability for a "bullish scenario," where copper prices surge to USD 15,000 per ton. However, this requires a series of perfect macro alignments: aggressive pricing by investors for a "very soft landing" of the U.S. economy, further weakening of the dollar, larger rate cuts by the Federal Reserve triggering a cyclical growth recovery, or unexpected shocks on the supply side (such as mining supply issues or slow responses of scrap copper to high prices). But before these new catalysts emerge, investors should be wary that the January frenzy may be the peak for the entire year