Goldman Sachs has cast an optimistic light on the future of copper, aluminium, and metallurgical coal, as expressed in its latest commodity market forecasts. Notably, their projections for the second half of 2024 suggest a highly favourable market for copper, with the bank also showing confidence in aluminium and metallurgical coal.
According to Goldman Sachs’ analysis, copper is expected to encounter a market deficit driven by a constrained mine supply, particularly in Chile and Peru, two of the world’s largest copper-producing countries. This supply constraint is expected to exert an upward pressure on copper prices, which the investment bank forecasts will average US$4.55 per pound in the latter half of 2024, and further increase to US$4.8 per pound in 2025.
The forecast for aluminium is also positive; Goldman Sachs anticipates the price to average US$1.27 per pound in 2025. This projection reflects concerns over capacity caps in China and supply challenges in Australia, potentially leading to a tight market for aluminium.
While the outlook for copper and aluminium sparkles with potential, iron ore prices are projected to hold steady at around US$100 per tonne for the remainder of the year. This indicates a level of stability in the iron ore market, amidst the volatile commodity landscape.
Moving to company-specific forecasts, Goldman Sachs has maintained a bullish stance on heavyweights in the mining sector such as Rio Tinto, BHP, and Iluka Resources. For the second half of 2024, Rio Tinto is expected to witness robust production growth. BHP and Iluka Resources have received ‘buy’ ratings, fuelled by their promising outlook on copper and other contributing factors.
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In addition, Goldman Sachs upgraded Deterra Royalties to a ‘buy’ rating and highlighted the firm’s proposal to acquire Trident Royalties, potentially bolstering its market stance.
Conversely, the bank has designated sell ratings for New Hope, Mineral Resources, and Fortescue. Fortescue, in particular, saw a downgrade due to the uncertainties linked with its energy diversification and decarbonisation initiatives. These concerns are believed to potentially affect the company’s dividend distribution and financial stability.
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