METALS-Copper hits record high after Citi lifts price outlook

(Updates prices for the Asian market close)

SHANGHAI, Dec 5 (Reuters) - Copper touched a record high on Friday, after Citi lifted its price outlook for the industrial metal, with supply concerns and optimism around a likely interest rate cut by the U.S. Federal Reserve next week underpinning the market.

The most-active copper contract on the Shanghai Futures Exchange closed daytime trading 2.19% higher at 92,780 yuan ($13,125.28) per metric ton, after hitting an all-time high of 92,910 yuan a ton earlier in the session.

The Shanghai copper registered a 4.99% weekly gain.

The benchmark three-month copper on the London Metal Exchange also surged, up 1.90% to $11,667.60 a ton as of 0705 GMT after setting a peak of $11,705 earlier.

The London copper is poised to end the week up 4.32%.

Analysts at Citi expect copper prices to continue climbing into early next year and average about $13,000 a ton by the second quarter of 2026, up from $12,000 in their October outlook, with their bull case rising to $15,000 from $14,000.

The bank says prices will remain supported by macro-fund buying as investors position for a soft U.S. economic landing, alongside a widening supply shortage, as mine supply growth fails to keep pace with accelerating energy-transition and artificial intelligence-related demand.

Additional tightness is expected from U.S. stockpiling linked to COMEX-LME arbitrage, the bank added.

Reuters reported on Thursday that commodity trader Mercuria was behind the more than 40,000-ton withdrawal of copper from LME-registered warehouses earlier this week.

Copper continued to flow out of LME-registered warehouses in Asia, according to data from the exchange on Thursday.

Much of the copper withdrawn from the LME sheds had been shipped to the U.S., where copper prices remained elevated amid tariff concerns, keeping copper stocks elsewhere low.

Elevated hopes for a Fed rate cut next week also supported the copper market.

Among other SHFE base metals, aluminium was up 1.29%, zinc gained 2.04%, lead rose 0.61%, tin declined 0.28% and nickel was little changed.

Among other LME metals, aluminium gained 0.34%, zinc added 0.79%, lead nudged 0.22% higher, tin dipped 0.14% and nickel was little changed. ($1 = 7.0688 Chinese yuan renminbi) (Reporting by Dylan Duan and Lewis Jackson; Editing by Rashmi Aich)