Goldman Sachs Expects Vulnerability in Industrial Metals in Near Term

         

Summary: Goldman Sachs predicts that industrial metals markets will continue to face softness in the near term due to declining demand and the impact of higher interest rates. While the building and construction sector remains the weakest, other sectors are also experiencing a decrease in volume appetite, except for aerospace. Chinese imports of copper may be restrained, putting pressure on the copper market. However, Goldman Sachs views aluminum as having the best relative micro setup due to China’s supply constraint. The bank remains bearish on nickel and expects the market to stay in surplus, while also predicting a surplus in the China lithium carbonate market.

Goldman Sachs has expressed its outlook on the industrial metals markets, stating that there will likely be continued softness in the near term. This is primarily due to the decline in demand and the impact of higher interest rates. According to analysts at Goldman Sachs, the building and construction sector remains the weakest, but other sectors are also experiencing a decrease in volume appetite, with the exception of aerospace.

The copper market is expected to face pressure in the near term, as there is a likelihood that Chinese imports of the metal could be restrained. On the other hand, Goldman Sachs sees aluminum as having the best relative micro setup. This is because it is largely tied to China’s supply constraint from the capacity cap.

Goldman Sachs maintains a bearish stance on nickel, with a 12-month target price of $16,000 per metric ton. The bank expects the nickel market to remain in surplus in the year ahead, mainly due to increasing Indonesian and Chinese supply. Meanwhile, three-month nickel on the London Metal Exchange was trading around $18,710 per metric ton on Monday.

Regarding the China lithium carbonate market, Goldman Sachs remains bearish on spot prices and predicts a surplus in the market over 2024. The bank has set a 12-month target price of $15,000 per metric ton for China lithium carbonate spot prices.

Overall, the outlook for industrial metals remains cautious, with Goldman Sachs anticipating vulnerability in the near term.

Tags: Goldman Sachs, industrial metals, softness, declining demand, higher interest rates, building and construction, copper market, aluminum, nickel, China lithium carbonate

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