China stimulus to boost base metals, iron ore prices in the near-term- Citi

Investing.com-- Citi analysts presented a bullish, near-term view for base metals and iron ore prices, citing optimism over more stimulus measures from top consumer China, although the longer-term view was less positive.

Citi hiked its three-month price targets for copper, aluminum, nickel, zinc, lead, tin, and iron ore, but left its long-term price targets unchanged. 

“We see temporary near-term upside for base metals and iron ore in the coming weeks on China policy momentum before seeing this fading in our base case as US

election and recession risks and a physical market reaction to higher prices come to the fore,” Citi analysts wrote in a recent note.

They said that this forecast also depended on how China would follow through with its implementation of stimulus, as well as the path of U.S. interest rates and the 2024 election. 

The brokerage was especially bullish on iron ore, forecasting a three-month PT of $120 a ton, up from $85 a ton, given its heavy exposure to China stimulus. China is the world’s biggest importer of iron ore. 

Copper is also expected to benefit from similar trends, with Citi rasing its three-month PT to $10,500 a ton from $9,500 a ton. 

But the brokerage flagged a more cautious long-term outlook, citing uncertainty over U.S. interest rates and a potential recession. 

The U.S. 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.