Investing.com -- Base metals are expected to remain supported in the near term as tariff relief temporarily sustains physical demand, Citi said in its latest Metal Matters report.
The bank revised its Q2 2025 forecasts to reflect a broadly neutral outlook across the complex, citing a 90-day reprieve in U.S.-China trade measures that may lead to further frontloading of goods and metals demand.
“We revise our price forecasts for base metals, with a broadly neutral outlook for the remainder of Q2’25,” analysts led by Tom Mulqueen wrote in the note.
The temporary tariff deferral, announced on May 12, is seen encouraging trade and manufacturing activity until late June, delaying the expected pullback in consumption growth.
Citi maintained its bearish 0–3 month price view, expecting demand to weaken into the third quarter as the effects of frontloaded trade fade and higher underlying tariffs take hold. “We continue to anticipate base metals price downside into 3Q’25,” the analysts said, highlighting copper and zinc as particularly exposed.
The report also points out that easing supply issues in tin from the Democratic Republic of Congo, Indonesia and Myanmar contributed to a downgrade in near-term tin price forecasts.
Copper remains a focal point, especially in the context of possible Section 232 tariffs in the U.S. “We continue to anticipate a 25% levy on U.S. copper imports with limited exemptions,” analysts said, although it pushed its base case for implementation to the third quarter.
The analysts expect this to trigger a temporary collapse in U.S. import demand and a drawdown in domestic inventories.
Fund positioning is largely neutral to bearish, with copper and tin showing some long interest. However, Citi believes any price movements will remain relatively modest.
“Fluctuations in U.S. dollar strength and expectations for Fed and China policy support should provide a continued cushioning effect,” the team continued, dampening price volatility driven by trade headlines.
Citi sees modest downside across metals, forecasting copper to fall to $8,800/t and zinc to $2,500/t in 3Q. Longer-term, the bank remains bullish on COMEX copper calendar spreads due to tightening inventory and easing financing costs.