Citigroup: Aluminum prices bottom out in the short term and are expected to rise to US$3500 by the end of the year

On July 3, Citigroup said it expected aluminum prices to bottom out in the next month, and then gradually recover to the range of US$3300 to US$3500 per ton between September and December. The bank believes that this judgment is based on multiple factors, including the Fed's policy trend towards dovish, falling real interest rates, improving demand prospects, and continued decline in inventories under the terms of consumption days. At the same time, the recent decline in aluminum prices mainly reflects weaker-than-expected demand, a slowdown in visible inventory demineralization, mitigation of geopolitical risks, concentrated liquidation of speculative and physical positions, and rising market expectations for future supply increases. Aluminum prices have fallen by about 20% from about US$4450/ton in the past month, shaking a rally that has lasted for more than a year. However, Citi believes that it is not appropriate to short aluminum prices at the moment because the market was already in a supply gap before the recent shock, and new supply is difficult to make up for demand growth in a timely manner. The bank also pointed out that market concerns about a rapid return of supplies from the Middle East may be exaggerated.