Investing.com — Citi analysts presented a bullish near-term view for base metals and iron ore prices, citing optimism about more stimulus from top consumer China, although the longer-term view was less positive.
Citi raised its quarterly price targets for aluminum, nickel, zinc, lead, tin and iron ore, but left its long-term price targets unchanged.
“We see temporary upside potential for base metals and iron ore in the coming weeks on the back of Chinese policy momentum before seeing this fade in our base case as the US
election and recession risks and a physical market reaction to higher prices are emerging,” Citi analysts wrote in a recent note.
They said this forecast also depended on how China would implement its stimulus measures, as well as the path of US interest rates and the 2024 election.
The brokerage was particularly bullish on iron ore, forecasting a three-month PT of $120 per tonne, up from $85 per tonne given heavy exposure to Chinese stimulus. China is the world’s largest importer of iron ore.
Copper is also expected to benefit from similar trends, with Citi raising its three-month PT from $9,500 per tonne to $10,500 per tonne.
But the brokerage signaled a more cautious long-term outlook, citing uncertainty over U.S. interest rates and a possible recession.
The US election is also a point of uncertainty, with a potential victory for Donald Trump likely to impact base metal prices given his largely anti-China stance.