{"id":12017,"date":"2024-07-08T20:30:46","date_gmt":"2024-07-08T20:30:46","guid":{"rendered":"https:\/\/economicherald.net\/?p=12017"},"modified":"2024-07-08T20:30:46","modified_gmt":"2024-07-08T20:30:46","slug":"goldman-sachs-bullish-on-copper-aluminium-and-met-coal-for-h2-2024","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=12017","title":{"rendered":"Goldman Sachs bullish on copper, aluminium and met coal for H2 2024"},"content":{"rendered":"

Goldman Sachs releases copper and iron ore forecasts for H2 CY24
\nBig miners RIO, BHP, ILU make the buy list
\nFMG and MIN among the sells <\/p>\n

\u00a0<\/p>\n

Goldman Sachs has released its copper and iron ore forecasts for the second half of 2024 \u2013 along with a juicy list of its buys and sells ahead of H1 FY25.<\/p>\n

Heading into the second half, the investment bank remains bullish on copper, aluminium and metallurgical (met) coal on forecast market deficits.<\/p>\n

The GS commodity team continues to forecast a copper market deficit on constrained mine supply (Chile and Peru) and low inventories, noting that the copper market\u2019s path into scarcity has gathered momentum so far this year, with the concentrate segment \u2013 which sits just before the metal market \u2013 moving into extreme tightness.<\/p>\n

\u201cWe expect the copper price to average US$4.55\/lb in 2H24 and US$4.8\/lb in 2025,\u201d reads the report.<\/p>\n

On aluminium, Goldman remains positive from the impact from China\u2019s capacity cap and strong imports and solar build-out. The bankers are also bullish on alumina due to aluminium, bauxite supply concerns in China, alumina supply issues from Australia (closure of Kwinana refinery, gas disruptions in Qld) and cost curve support.<\/p>\n

\u201cWe expect the aluminium price to average US$1.27\/lb in 2025,\u201d wrote the investment bank.<\/p>\n

Looking to iron ore prices, it continues to expect the benchmark 62% iron ore price to average ~US$100\/t over the remainder of the year.<\/p>\n

On met coal, Goldman forecasts the market will be broadly balanced from 2024-2026 with increasing India demand being offset by a modest recovery in Australian supply.<\/p>\n

\u201cHowever, we forecast a deficit from 2027 driven by underinvestment in new premium met coal supply in Australia and Canada,\u201d the report noted.<\/p>\n

\u201cCombined with our estimate of a long run met coal market deficit, we have increased our long run price from US$205\/t to US$220\/t (real $ from 2028).\u201d<\/p>\n

The investment bank remains bearish on thermal coal and battery materials like lithium and nickel on forecast market surpluses.<\/p>\n

\u00a0<\/p>\n

Which stocks are buys?<\/strong><\/h2>\n

Goldman Sachs remains \u2018buy\u2019 rated on Rio Tinto (ASX:RIO),<\/a><\/strong> BHP (ASX:BHP),<\/a><\/strong> South32 (ASX:S32),<\/a> Coronado Global Resources (ASX:CRN)<\/a><\/strong>, Champion Iron (ASX:CIA),<\/a><\/strong> Iluka Resources (ASX:ILU),<\/a><\/strong> Lynas (ASX:LYC)<\/a> <\/strong>and Bluescope Steel (ASX:BSL).<\/a><\/strong><\/p>\n

RIO in particular is expected to see strong production growth in 2024-2025E of ~5% CuEq, driven by the ramp-up of the Oyu Tolgoi underground copper mine, recovery at Escondida and Bingham, and higher Pilbara Fe shipments with the ramp-up of new mines.<\/p>\n

BHP nabbed a buy rating due to a bullish outlook on copper and met coal, and S32 due to all assets except manganese and Sierra Gorda copper expected to hit FY24 guidance.<\/p>\n

Iluka also secured a buy rating after Goldman Sachs noted a modest zircon price increase in 2Q for zircon (1Q achieved price was US$1,873\/t FOB for premium and standard), particularly as they forecast the demand for zircon and high grade TiO2 feedstock to recover over 2024 with supply shortages over medium term.<\/p>\n

Another honourable mention goes to Bluescope Steel, which Goldman Sachs thinks has a compelling US growth strategy, with EBITDA to grow 20% by FY28 to US2.4bn.<\/p>\n

\u201cBSL trades at a discount at ~4.5x NTM EBITDA vs the US painted\/coated peer group on ~7.5x,\u201d said Goldman.<\/p>\n

\u201cWe think BSL\u2019s Australian and US painted and coated steel (>20% margin) deserves to trade on ~8x EBITDA.\u201d<\/p>\n

\u00a0<\/p>\n

Upgrade, neutral and sell<\/strong><\/h2>\n

The investment bank has also upgraded Deterra Royalties (ASX:DRR)<\/a><\/strong> from neutral to buy on valuation, \u201cwith the stock trading at ~0.8x NAV (A$4.75\/sh) and pricing in ~US$64\/t 62% Fe vs. spot at ~US$105\/t and our long run US$78\/t (real $, from 2028) 62% Fe iron ore price forecast.\u201d<\/p>\n

Not to mention the company also recently announced a proposal to acquire Trident Royalties, which has a portfolio of royalty and gold offtakes in production and advanced study stages.<\/p>\n

Among the sell-rated stocks are New Hope (ASX:NHC)<\/a>, Mineral Resources (ASX:MIN)<\/a><\/strong> and Fortescue (ASX:FMG)<\/a><\/strong>.<\/p>\n

FMG was downgraded off the back of uncertainties around Fortescue Energy diversification (such as the recent approval of the Phoenix hydrogen hub) and Pilbara decarbonisation and impact on dividend and balance sheet.<\/p>\n\n

The post Goldman Sachs bullish on copper, aluminium and met coal for H2 2024<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Goldman Sachs releases copper and iron ore forecasts for H2 CY24 Big miners RIO, BHP, ILU make the buy list FMG and MIN among the [more…]<\/a><\/p>\n","protected":false},"author":0,"featured_media":12018,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-12017","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nGoldman Sachs bullish on copper, aluminium and met coal for H2 2024 - Economic Herald<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/economicherald.net\/?p=12017\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Goldman Sachs bullish on copper, aluminium and met coal for H2 2024 - Economic Herald\" \/>\n<meta property=\"og:description\" content=\"Goldman Sachs releases copper and iron ore forecasts for H2 CY24 Big miners RIO, BHP, ILU make the buy list FMG and MIN among the [more...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/economicherald.net\/?p=12017\" \/>\n<meta property=\"og:site_name\" content=\"Economic Herald\" \/>\n<meta property=\"article:published_time\" content=\"2024-07-08T20:30:46+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=12017#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=12017\"},\"author\":{\"name\":\"\",\"@id\":\"\"},\"headline\":\"Goldman Sachs bullish on copper, aluminium and met coal for H2 2024\",\"datePublished\":\"2024-07-08T20:30:46+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=12017\"},\"wordCount\":720,\"publisher\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=12017#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2024\\\/07\\\/GS-Hero-1-LMBxSX.jpeg\",\"articleSection\":[\"Finance\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=12017\",\"url\":\"https:\\\/\\\/economicherald.net\\\/?p=12017\",\"name\":\"Goldman Sachs bullish on copper, aluminium and met coal for H2 2024 - 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