The macroeconomic and energy transition will drive metal prices, and we are still optimistic about copper and gold. It is expected that by 2025, the price of copper will exceed 10,000 US dollars/ton, and the price of gold will exceed 2,500 US dollars/ounce.
The Zhitong Finance App learned that Bank of America Securities released a research report saying that in the second quarter, the global commodities team updated the metal price forecast. The macroeconomic and energy transition will drive metal prices, and we are still optimistic about copper and gold. It is expected that by 2025, the price of copper will exceed 10,000 US dollars/ton, and the price of gold will exceed 2,500 US dollars/ounce. The bank is optimistic about aluminum prices and expects China's aluminum demand to increase by 2% in 2024. However, they have a neutral view of lithium and are wary of steel. The bank listed Zijin Mining (02899), Shandong Gold (01787), and China Aluminum (02600) as the preferred metal/mining stocks, while also optimistic about Luoyang Molybdenum (03993), Jiangxi Copper (00358), and China Hongqiao (01378).
On the copper side, the Bank of America raised the 2024 copper price forecast by 8% to 9,321 US dollars/ton, and raised the 2025 copper price forecast by 2% to 10,750 US dollars/ton. The bank said that due to production disruptions and lower guidelines, global copper production is expected to grow by only 0.5% in 2024, while grid investment and demand for copper driven by electric vehicles will increase by 3%.
The bank gave Zijin Mining a “buy” rating and stated that as a high-quality copper and gold producer in China, with solid execution capabilities, its copper production and gold production will increase by 10% in 2024. In addition, the bank also gave Luoyang Molybdenum (03993) a “buy” rating because the company's copper production is expected to increase by 24% in 2024, and profits will increase strongly year-on-year in the first half of the year; it gave Jiangxi Copper (00358) a “buy” rating because the stock's valuation was low, and the net market ratio was only 0.7 times.
In terms of gold, the Bank of America raised the 2024 gold price forecast by 17% to 2,317 US dollars/ounce, and raised the 2025 gold price forecast by 17% to 2,513 US dollars/ounce. The bank said it is still optimistic about gold due to increased expectations of the Fed's interest rate cut and the weakening of the US dollar, investors seeking defensive assets amid geopolitical uncertainty/black swan events, central bank purchases of gold, and a slowdown in ETF outflows. The bank gave Shandong gold a “buy” rating and said that the company's gold production in 2024 and 2025 will increase by 21% and 26%, respectively.
In terms of aluminum, the Bank of America raised the 2024 aluminum price forecast to RMB 19,500 per ton, and raised the 2024 alumina price forecast to RMB 3,200 per ton. The bank said that in 2024, global aluminum production will increase by 3%, while demand will increase by 4%. Limited supply growth provides support for aluminum prices, so it is optimistic about aluminum prices. The bank expects China's aluminum demand to grow 2% in 2024, driven by investment in power grids and growth in the electric vehicle market.
The bank maintained China Aluminum's “buy” rating and listed it as the first choice for aluminum stocks. The profit margin of its aluminum business is expected to be RMB 2,800 per ton. The bank also gave China Hongqiao (01378) a “buy” rating. The target price was raised from HK$8.5 to HK$11.5. The profit margin for its aluminum business is expected to be RMB 3,400 per ton, and the company's cost portfolio is improving and the dividend yield is 8%.
In terms of lithium, Bank of America believes there is limited room for the metal's price decline, but it is still too early to buy it. The bank raised the 2024 lithium carbonate price forecast to RMB 115,000 per ton and the 2025 lithium carbonate price forecast to RMB 125,000 per ton. The bank gave Ganfeng Lithium (01772) a “neutral” rating, had a neutral view of the rebound in the company's refining profit margin in the first quarter, and pointed out that considering the oversupply in the lithium market in 2024, this may be temporary.
When it comes to steel, the Bank of America is cautious. The bank said that due to falling raw material prices, the steel industry's profit margin improved slightly month-on-month in the first quarter of 2024, increasing by RMB 150 per ton. However, the bank added that slow recovery in demand is still the biggest obstacle facing steel companies. The bank gave Baosteel shares (600019) a “buy” rating, calling the company a leader in China's steel industry.