OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

UBS rates BHP as Neutral

UBS upgrades its long-term iron ore price to US$93/t, from US$85/t as iron ore demand enters a new phase. China is pivoting to manufacturing and exports and away from construction. This is offset by the emergence of strong steel demand from the "Global South".

Supply-side factors include iron grade decline, depletion and soft capex and have resulted in lower supply growth compared with prior expectations. The broker believes the market is underestimating the structural forces that are shaping the next decade of iron ore.

WA iron ore is structurally well positioned and BHP Group is the only major Pilbara producer to deliver real unit cost reductions since FY22, UBS adds. Neutral retained. Target is raised to $61 from $59.

Citi rates INA as Buy

Ingenia Communities has received a third revised non-binding indicative proposal from Warburg Pincus to acquire 100% for $5.25 per share, which reflects a circa 4% lift from the prior proposal of $5.05 per share, and 10% from the initial offer.

The proposal is subject to several conditions including that management does not go ahead with the Peet ((PPC)) acquisition, Citi explains.

The Board is currently assessing the revised offer. The analyst believes investors want an offer of $5.25–$5.50 and there might be another higher proposal.

Buy. Target $5.43.

Ord Minnett rates RIO as Buy

Ord Minnett makes mostly minor changes to commodity price forecasts following a September quarter characterised by stronger energy, coal, precious and most base metal prices, while lithium fell -20%.

The broker remains positive on lithium longer term, lifting CY27 and CY28 price forecasts by 2% and 5%, respectively, supported by electric vehicles, energy storage and renewables demand.

Copper's recent rally is considered vulnerable to reversal, prompting a -6% CY27 price forecast cut, though longer-term fundamentals remain supportive. Aluminium price forecasts are also lowered.

Ord Minnett currently sees more attractive risk-reward across bulk commodities than base metals, particularly iron ore.

Among the major miners, the broker continues to prefer Buy-rated Rio Tinto over Hold-rated BHP Group, citing Rio Tinto's stronger production and earnings growth outlook and lower earnings multiple.

Unchanged Buy rating for Rio Tinto. Target lowered to $184 from $187.

This is a summary of research released by Ord Minnett yesterday.