The supply deficit will prompt copper prices to move above $6,000 a ton in the second half of 2017, with peaks of close to $7,000 a ton before the end of the year, and above $8,000 a ton before the end of 2020, Citi predicted.
On the demand side, there's now little to worry about, since the dramatic crunch in capital expenditure cuts since an extended broad-based commodities slump hit the market in the summer of 2014. This has "eviscerated" the copper project pipeline for much of the remainder of the current decade, and will set the market up for the most sustained price rally since 2010.
In 2016, China's real copper consumption likely rose 5.7 percent, in the high end of the projected 3-7 percent range, Citi wrote.
"The much-vaunted wall of supply that hit copper in 2016 failed to drown the red metal in excess supply," the Citi note added.
For 2017, Citi said it expects Chinese copper demand to moderate to between 3 to 4 percent, driven by power grid improvement plans and vehicle sales.
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