Minerals and metals demand recovery in 2021

Metal producers and miners should see a more favourable pricing environment in 2021 as almost all mineral and metal prices (except iron ore) are expected to average higher in 2021 on a year-on-year (y-o-y) basis, Fitch Solutions forecasts in its latest report.

While metal prices made an impressive recovery over Q2-Q420, following the drop recorded at the beginning of the year due to covid-19, Fitch notes that prices will still average lower on a y-o-y basis in 2020.

Fitch says prices in 2021will be supported by the broader and deeper global economic recovery as covid-19 vaccines are made available. Access to vaccines will also help reduce the disruptions to operations seen in 2020 in multiple key mining countries such as Peru and South Africa.

Mining and metal operations will therefore improve in 2021, says Fitch, after the sector saw significant disruptions in 2020 due to government-imposed lockdown measures, and stricter health and safety protocols.

This was particularly the case for the copper market as Peru and Chile, which account for a large share of mine output, were significantly impacted by the pandemic. The ensuing pickup in supply is likely to keep somewhat of a cap on prices.

Meanwhile, Fitch forecasts a sharp recovery in the global demand for mineral and metals in 2021. China’s metals consumption will remain strong as infrastructure projects continue to make progress, supported by the covid-19 stimulus policy.

Other countries that saw their mining and metal operations disrupted and impacted by lower end- demand will see a sharper recovery in production; such as the US, the EU, Japan and India in the case of steel and aluminium.

As overall prices, production and consumption of mineral and metals improve in 2021, the outlook for miners and metal producers is positive for next year.

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