Posted on 14 Jan 2021
Steel and other metal producers will enjoy a more favourable pricing environment in 2021 as almost all mineral and metal prices will be higher this year on a year-on-year average basis, Fitch Solutions says.
“In 2021, prices will be supported by the broader and deeper global economic recovery as Covid-19 vaccines are made available,” said Fitch head of commodities analyses Aurelia Britsch during a webinar on Wednesday monitored by Kallanish. “We expect this year an increase of steel prices by 7% on-year.”
Access to a vaccine will also help reduce disruptions to operations. Mining and steel operations will therefore improve in 2021, after the sector saw significant disruptions in 2020 due to government-imposed lockdown measures and stricter health and safety protocols.
“The only exception this year will be iron ore prices, which we expect to head lower in the first half of 2021, yet remain elevated, after being the clear outperformer in 2020 among the entire commodities complex,” Britsch observes. “This is due to expected higher production and supply by producers like Brazil.”
Looking at demand, Fitch Solutions forecasts a sharp recovery in global mineral and metal demand in 2021. A weaker US dollar, forecasted by the Country Risk team in the medium term, will also act as a tailwind for commodity prices.
“China’s steel consumption will remain strong as infrastructure projects continue to make progress supported by government policy,” Britsch said when prompted by Kallanish. “Demand is still strong, stocks are full and we expect the country’s GDP this year to recover strongly to 10.2% compared with 1.9% in 2020.”
Steel demand will see a sharper recovery in the US, EU, Japan and India, the agency concluded.
As overall prices, production and consumption of steel improves in 2021, Fitch Solutions’ outlook for metal producers is also positive for 2022.
Source:Kallanish
