The copper rally will extend into 2026 thanks to two drivers, according to Citi

Source: CritpoTendencia Original Title: The Copper Rally Will Extend into 2026 Thanks to Two Drivers, According to Citi Original Link: The year 2025 has been a huge boost for the commodities market, with massive increases in gold and silver. Copper also stands out in this group, experiencing a rally of significant proportions, with a +36% increase so far this year. However, this is not the end for the red metal, according to a recent report from Citi strategists.

Analysts assert that copper will extend its positive performance into 2026 as conditions improve for this asset. In a report cited by specialized sources, experts highlight two major factors that determine the bullish outlook on this raw material.

The first is the accelerated hoarding of global reserves in the United States. Demand in the North American country is driven by the need for this metal in creating data centers for the artificial intelligence (AI) sector. Building these infrastructures requires enormous amounts of copper for wiring, energy transmission, and cooling infrastructure.

The second important factor is the drought in mining activity. Numerous companies in the sector are cutting their extraction forecasts for 2026, adding pressure to supply. This second factor is crucial, as it would motivate increased purchases in the U.S. before China (curiously delayed in this demand) fully enters the buying phase of this resource.

The current price of copper is $5.45 per pound ($11.993 per ton).

What will be the dimensions of the potential copper rally?

For now, there is no certainty about the magnitude of the potential copper rally projected by Citi. According to these analysts, the metal will reach $13,000 per ton early in 2026. They do not rule out it could reach $15,000 in the second quarter. Experts agree that U.S. demand pressure will be decisive for the rise.

For example, Andrew Glass, CEO of Avatar Commodities, emphasizes that U.S. hoarding will continue to erode global availability. In his view, the current price surge represents a highly irregular distortion of this metal. This is mainly because purchases do not fully match industrial needs but are driven by fears of tariffs from Donald Trump.

In simple terms, U.S. companies accelerated their purchases in anticipation of possible tariffs on copper imports at U.S. ports. In any case, copper prices are likely to enter a new bullish run, which could harm various sectors of the global economy.

In particular, energy-related sectors could experience a drastic drop in margins. This is due to an additional massive expenditure to cover the costs of their copper purchases. Broadly speaking, the copper rally will be positive for sector companies but will also have ripple effects causing problems in various industrial areas.

Copper production will contract in 2026

The other factor in this equation, the expected decline in extraction, is another element to consider. If U.S. demand driven by tariffs can be seen as artificial inflation of the price, then scarcity in production creates a balance. Essentially, a sharp drop in mining output could lead to organic price increases.

According to data from the London Metal Exchange (LME), available copper reserves on that exchange are currently about 165,000 tons. Of these, approximately 66,650 tons are marked for delivery. Meanwhile, supplies are at -40% compared to what was available at the beginning of the year.

Additionally, analysts point out that 2025 was a year of disruptions for production. This has led to a downward revision of copper extraction expectations for the coming year.

During the past week, numerous producers updated their production guidance. These reflect an expected reduction of 300,000 tons in copper production for 2026. Overall, copper production in 2026 is unlikely to exceed 870,000 tons.