Citigroup expects aluminum to bottom within the next month and to recover to
$3,300–3,500/ton during Sep–Dec. The call is based on a more dovish Fed outlook,
falling real rates, an improving demand outlook and declining inventories on a
consumption‑days basis. The bank says the recent ~20% drop from about $4,450/t
over the past month largely reflected weaker-than-expected demand, slower
visible inventory draws, easing geopolitical risk, concentrated liquidations of
speculative and physical positions, and rising expectations of future supply
increases. Citigroup warns conditions do not favor shorting: the market was in a
supply deficit before the recent shock and new supply is unlikely to close the
gap quickly. It also says concerns about a rapid return of Middle East supply
may be overstated.
