Hui Shan and Jeffrey Currie, analysts at Goldman Sachs, said in a research note on Tuesday (January 2) that in the long run, the bank is more bullish on copper prices relative to aluminum prices because, in the case of price increases, aluminum producers Yields can be increased relatively easily. At the same time, Goldman Sachs also downplayed concerns about the slowdown in China’s metal demand.
Goldman Sachs expects copper prices to be $ 7,600 a tonne by 2020, higher than consensus expected in the market while aluminum prices will be $ 1,900 a tonne, less than market estimates. On Tuesday, the London Metal Exchange (LME) copper fell 0.6% to 7206 US dollars per tonne, LME aluminum fell 0.1% to 2264.5 US dollars per ton.
The bank pointed out that aluminum can be considered as “shale oil in metals,” and rising prices promptly stimulate new supplies, and the price goes down. However, due to the capital expenditure needs and engineering difficulties, it is difficult for copper producers to increase their new supply when copper prices rise. The copper supply response to prices is usually delayed by 9 to 10 years, while the aluminum industry is delayed by 0 to 1 year.
In addition, Goldman Sachs believes that the short-term zinc price is expected to be supported, the price will rise to 6,500 yuan per tonne in six months. On Tuesday, the three-month zinc index for LME rose 0.9% to $ 3,349 a tonne, hitting a high of $ 3,352 earlier in August 2007, when zinc demand was not yet affected by the financial crisis.
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In a research note Tuesday, Goldman Sachs also downplayed concerns about a slowdown in China’s metal demand. Analysts at the bank pointed out that “worries about a sharp slowdown in metal demand due to China’s adoption of a new” weightless weight “growth pattern may be over-exaggerated.” They added that metal producers outside China Will benefit.
Currie wrote in the report, “China’s ongoing supply-side reform and environmental restrictions have resulted in higher commodity prices and less production in China, both of which benefit producers outside China.”