In a metals observe, BofA’s commodities crew mentioned it was updating forecasts for many metals “principally marking to market costs” after China’s quicker reopening pulled ahead rallies the financial institution anticipated later within the 12 months.
“Certainly, a re-acceleration of China’s economic system ought to push aluminium and copper up into year-end,” the crew mentioned. Nevertheless, “we’re making extra aggressive calls on nickel (bearish), iron ore (bullish), coal (cautious) and lithium (bearish)”.
Consistent with others, together with Goldman Sachs and Fitch Options, BofA mentioned it anticipated iron ore to achieve $US150 a tonne within the June quarter. “Iron ore inventories at [Chinese steel] mills have fallen to all-time lows,” and re-stocking ought to bolster costs.
BofA is much less optimistic about coal. “Benchmark Newcastle thermal coal costs retraced from a excessive level of $US456 a tonne in September 2022 to a latest low of $US172 a tonne.
“The sharp collapse in costs was pushed by a confluence of things, together with a heat winter within the northern hemisphere and provides from Australia recovering after a extreme La Niña season. Taking a look at ahead balances, we now forecast Newcastle to common $US199 a tonne in 2023 and $US160 a tonne in 2024, down from $US300 a tonne and $US260 a tonne beforehand.
“With ahead markets pricing in $US216/t and $US186/t for 2023 and 2024, we stay bearish on coal however see a flooring finally rising.”
