Goldman Sachs and Citi believe copper prices can rally another 30 per cent, while Westpac sees iron ore dropping below $US90 a tonne.
Already a subscriber?Diverging prices for two of Australia’s key exports has triggered a rotation across commodity markets, with traders being told to abandon their love affair with iron ore and jump on the copper bandwagon.
In contrast, Mr Layton predicted that “iron ore is likely to be volatile and see the sell-off as having room to run further”.Australia last year exported $124.1 billion worth of iron ore last financial year and $12.27 billion in copper. Citi recommended that investors start buying the metal over the next three to six months, advising that any price below $US9000 was “cheap”. The broker sees prices hitting $US10,000 a tonne by the end of this year, before reaching $US12,000 the year after that.
“The supply shock which began with aggressive concentrate destocking and then sharp mine supply downgrades last year, has now advanced to an increasing bind on metal production,” said Goldman metals strategist Nicholas Snowdon., with growth boosted by robust factory output and investment at the start of the year. However, nationwide steel production was only marginally higher in the first two months compared to the same time last year.
“The slow pick-up in steel demand in China, despite March being a seasonal peak consumption month, has weighed on steel prices, eventually triggering production curbs at some domestic steel mills,” said ING commodity strategist, Ew Manthey.
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