Citi Analysts Expect Aluminum Prices Will Increase

- Sep 29, 2018-

1. Citi said that aluminum prices will increase by 8% to 10% in the next 6 to 12 months. The team led by Citigroup analyst Max Layton said that aluminum prices are expected to climb due to high production costs, raw material restrictions and sufficient stocks, and limited production growth in China, which is expected to lead to tight aluminum markets outside China. The average spot price for the London Metal Exchange in 2019 and 2020 is forecast to be $2,225/tonne and $2,350/ton Layton’s report to investors on Thursday said, “If the aluminum price falls to around $2,000/ton, it will constitute Consumers have a stronger chance of hedging or investors' long positions. The potential catalyst for this decline may be the relaxation of Russian sanctions, the escalation of US-China trade tensions or further instability in emerging markets."

2. The RMB will not reappear sharply during the year. Traders said that due to market expectations, the impact of the Fed’s interest rate “boots” on the foreign exchange market has gradually weakened. Considering that the long vacation is just around the corner, the demand for residential tourism use is rising, and the willingness of institutional positions is not strong. Recently, the RMB is expected to be dominated by weak shocks, but it is not expected to break away from the turbulent operation range since the end of August. Looking back, the exchange rate of the RMB against the US dollar is expected to continue to fluctuate with the US dollar index. The current market view of the US dollar is quite different, but it is generally not believed that the RMB will depreciate significantly against the US dollar. Huachuang Securities believes that due to the gradual aggression of the US economy, the Fed's interest rate hike into the second half, and the moderate inflation in the US during the year, the US dollar index rebounded in the near term and it is difficult to break through the 95-97 range. At the same time, China's central bank's willingness to stabilize the exchange rate has gradually increased, and the follow-up policy adjustment toolbox is sufficient. Therefore, the probability of a large depreciation of the RMB exchange rate in a short period of time is low.