London Metal Exchange week: Near-term risks weigh on sentiment; Citi is relatively bullish on aluminium
Participants remain hopeful about the long-term outlook for industrial metals but are becoming cautious about prices in 2027. Citi is more optimistic than the consensus on aluminium, copper in the near term, and lead, but more pessimistic on zinc.
Original source：Citi ResearchFirst published on Unhidea：Original source date：
Key takeaway
The long-term growth story for industrial metals remains intact, but recent geopolitical risks and growth and supply pressures in 2027 have created divergent price outlooks; Citi is relatively bullish on aluminium, copper in the near term, and lead.
Why are participants more cautious about prices?
At London Metal Exchange week, Citi found that participants were generally cautious about the outlook for industrial metals, particularly concerned about price performance in 2027.
Their concerns include weak economic growth, AI-related risks, high energy prices, supply growth, and disappointment over US copper tariffs. Together, these factors have dampened long-term optimism.
Where does the long-term optimism come from?
Participants remain positive about the long-term upside from structural and strategic factors such as AI and power.
Another potential source of support is an expansion of tariff-driven US metal stockpiling from copper to other metals; this scenario depends on whether the scope of stockpiling broadens.
Where does Citi differ from the consensus?
Compared with the market consensus for 2027, Citi is more optimistic on aluminium, copper in the near term, and lead, but more pessimistic on zinc. In its headline, Citi calls shorting aluminium a dangerous trade.
Citi remains cautious on metals overall because of geopolitical risks ahead of elections in Israel and the United States; if the US and Iran reach an agreement before year-end, the bank could subsequently turn optimistic.
Citi sees conflict risk as particularly pronounced over the coming week and advises investors and risk managers to protect against outcomes that differ substantially from expectations.
