Citi Research Shifts to Neutral Stance on Aluminium and Zinc in Short Term
Citi Research analysts have shifted to a neutral stance on aluminium and zinc in the short term after achieving their bullish price targets. The robust rally in August saw significant price increases for both metals, aligning with Citi's optimistic forecasts.
Aluminium and zinc prices surged by approximately 15% in August, with aluminium reaching just above Citi's near-term target of $2,500 per tonne and zinc trading about 5% above its target of $2,800 per tonne. Despite these gains, Citi is now adopting a more cautious approach due to recent market volatility.
The metals market remains vulnerable to potential economic data softening, fluctuating manufacturing sentiment, and uncertainties surrounding the upcoming U.S. presidential election. However, Citi maintains a positive outlook for aluminium in the long term, with an average price forecast of $2,800 per tonne in 2025.
On the other hand, zinc's near-term outlook is more mixed, with Citi taking a neutral-to-bearish stance. Despite this, the brokerage remains optimistic about zinc's prospects in the medium term, projecting a price of $3,100 per tonne by the first quarter of 2025.
The global refined zinc market is expected to face a deficit in 2024, mainly due to supply-side constraints. While near-term performance may be limited, Citi anticipates a rebound in zinc prices by early 2025 as manufacturing sentiment improves.
In conclusion, investors should be cautious in the short term due to market uncertainties, but there is potential for growth in both aluminium and zinc in the long term. Stay informed about global economic trends and market conditions to make informed investment decisions.