Citi revises down 6-12 month copper forecast amid tariff concerns

Feb 18 (Reuters) - Citi on Tuesday lowered its 6-12 month price forecast for copper and shifted its expected average quarterly price weakness to later in the year, citing the decreasing likelihood of substantial broad reciprocal U.S. tariffs taking effect in the first quarter.

The bank now predicts copper to average $8,500 per metric ton over the next 6 to 12 months, down from its previous estimate of $9,000.

Three-month copper CMCU3 on the London Metal Exchange (LME) was little changed at $9,398 a metric ton on Tuesday. It hit its highest in three months on Friday at $9,684.50.

U.S. President Donald Trump has tasked his economics team with devising plans for reciprocal tariffs on every country that taxes U.S. imports, raising the risk of a global trade war with American friends and foes.

"We think base metal price and physical market strength can persist until early April ahead of expected wider U.S. tariff implementation through second quarter of 2025," the bank said in a note.

Citi revised its copper supply and demand balance, predicting a small deficit of about 136 kilotons in 2025.

The bank also projected a potential widening of the COMEX-LME copper arbitrage on one-year forwards to approximately $1,400 per metric ton. This prediction for the transatlantic gap is in response to an anticipated 15% effective U.S. import tariff.

Citi further predicts a rise of 1.7% in copper end-use consumption in 2025, reflecting potential headwinds from tariffs and restrictive developed market monetary policies.