Citi Analysts Bullish on Base Metals and Iron Ore Prices in Near Term, Long-Term View Less Positive
In a recent note, Citi analysts shared their optimistic outlook for base metals and iron ore prices in the near term, citing increased stimulus measures from China. However, they expressed caution about the long-term outlook due to various factors.
Citi raised its three-month price targets for copper, aluminum, nickel, zinc, lead, tin, and iron ore, but left its long-term targets unchanged. They anticipate temporary upside in the coming weeks before potential challenges arise such as US election and recession risks.
The forecast is dependent on China's stimulus implementation, US interest rates, and the 2024 election. Citi is particularly bullish on iron ore, with a three-month price target of $120 a ton, up from $85 a ton, due to China's heavy exposure to stimulus. Copper is also expected to benefit, with Citi increasing its three-month price target to $10,500 a ton from $9,500 a ton.
However, the brokerage is more cautious about the long-term outlook, citing uncertainties around US interest rates, potential recession, and the impact of the US election. A victory for Donald Trump could impact base metal prices due to his anti-China stance.
In conclusion, investors can expect short-term gains in base metals and iron ore prices, driven by China's stimulus measures. However, long-term uncertainties such as US economic conditions and political factors could lead to challenges in the future. It's important for investors to stay informed and monitor these developments closely to make informed investment decisions.