Exclusive: Citi Analysts Bullish on Base Metals and Iron Ore Prices in Short Term, China Stimulus Key Driver
Top financial experts at Citi have revealed a promising outlook for base metals and iron ore prices in the near future, fueled by optimism surrounding increased stimulus measures from leading consumer China. While the long-term view remains less positive, Citi has raised its three-month price targets for copper, aluminum, nickel, zinc, lead, tin, and iron ore, signaling potential gains in the coming weeks.
According to a recent note from Citi analysts, the temporary surge in base metals and iron ore prices is expected to be driven by China’s policy momentum, with a possible fade in the future due to factors such as the US election, recession risks, and market response to higher prices. The success of this forecast hinges on China’s stimulus implementation, US interest rates, and the upcoming election in 2024.
The brokerage is particularly bullish on iron ore, with a three-month price target of $120 per ton, up from $85 per ton, attributing the positive forecast to China’s significant iron ore imports. Copper is also set to benefit from similar trends, with a revised three-month price target of $10,500 per ton.
Despite the short-term optimism, Citi remains cautious about the long-term outlook, citing uncertainties surrounding US interest rates, potential recession, and the impact of the upcoming US election. A victory for Donald Trump could particularly influence base metal prices due to his adversarial stance towards China.
Analysis: Investors should keep a close eye on the developments in China’s stimulus measures, US interest rates, and the political landscape leading up to the 2024 election as these factors are likely to impact base metals and iron ore prices in the short term. While the near future looks promising, it is important for investors to remain vigilant and consider the potential risks associated with long-term investments in this sector.