China Stimulates to Raise Base Metals and Iron Ore Prices in the Near-Term – Read By Investing.com

Investing.com– Citi analysts presented a bullish near-term outlook for base metals and iron ore prices, citing optimism about more stimulus from top consumer China, though the longer-term outlook long was less positive.

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

“We see a short-term temporary uptick in base metals and iron ore over the next few weeks on China’s policy momentum before we see that decline in our base case as the US.

Electoral 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 forecast also depends on how China follows through on the implementation of stimulus, 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 a tonne, up from $85 a tonne, given its strong exposure to Chinese stimulus. China is the largest importer of iron ore in the world.

Copper is also expected to benefit from similar trends, with Citi lifting its three-month PT to $10,500 per tonne from $9,500 per tonne.

But the brokerage signaled a more cautious long-term outlook, citing uncertainty over US interest rates and a potential 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.