Go long aluminum and copper, add gold in 2019, Deutsche Bank says

  • Improved Chinese demand and supply-demand dynamics specific to aluminum and copper will drive outperformance for the two metals, Deutsche Bank analysts say.
  • The firm rates Teck Resources (NYSE:TECK) a top pick among base metals with a Buy rating on Alcoa (NYSE:AA) but downgrades First Quantum Minerals (OTCPK:FQVLF) to Hold from Buy on near-term operational risks in Zambia and the stock's YTD rally.
  • Deutsche Bank also raises its iron ore price forecast for the next three years, saying it will take VALE until ~2022 to get close to production totals that originally were expected for 2019.
  • The firm rates Steel Dynamics (NASDAQ:STLD), Commercial Metals (NYSE:CMC) and Nucor (NYSE:NUE) at Buy, saying the three will improve their profit in 2019 through spreads and volumes and notes there is still "the tail end of a seasonal trade remaining" for steel equities.
  • Deutsche also recommends adding gold to an investment portfolio this year due to a more dovish Fed and the potential for a weaker U.S. dollar; the firm rates Barrick Gold (NYSE:GOLD) and Wheaton Precious Metals (NYSE:WPM) as top picks.
  • ETFs: OTCPK:JJCTF, DBB, CPER, BOM, BDD, JJM, BOS, RJZ, UBM, JJUB
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