Citi downgrades South32 as global demand wavers
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The news: Citi has downgraded its rating on mining group South32, warning of a "near-term tug-of-war" between improving demand in China and persistent global headwinds.
The numbers: Citi downgraded South32 from "neutral" to "buy" and cut its price target from $3.70 to $3.40.
South32 shares were down 0.5% to $3.08 in early trading.
The context: Citi analysts flagged that mining sector underperformance is now extended, with the sector lagging the ASX 200 by over 30% since October 2023.
While China continues to support iron ore through resilient pig iron production and looser monetary policy, residential property and infrastructure trends remain mixed, the analysts said.
They therefore expect South32 shares to remain cheap for longer amid subdued global metals demand.
The source: Citi research
