Posted on 20 Sep 2022
Fitch Ratings has lowered its short-term assumptions for iron ore, hard coking coal and nickel prices, reflecting lower current prices and increasing uncertainties over short-term demand, Kallanish notes.
The rating agency cut 62% Fe iron ore for 2022 to $115/tonne cfr China from $120/t, but maintains its 2023 and 2024 prices at $85/t and $75/t respectively. It has also kept its 2025 and long-term prices at $70/t.
Meanwhile, Fitch has revised down hard coking coal for 2022 to $370/t fob Australia from $400/t, but keeps its 2023 price at $200/t. It also maintains its 2024, 2025 and long-term prices at $140/t.
Fitch has also lowered nickel (LME spot) for 2022 to $24,000/t from $25,000/t. It maintains its 2023 and 2024 prices at $20,000/t and $17,000/t respectively. It also keeps its 2025 and long-term prices at $15,000/t.
"We have cut the 2022 iron ore and coking coal price assumptions reflecting year to date pricing on lower steel demand, particularly in China, which leads to steel production curtailments and lower demand for steelmaking inputs, falling steel producers’ margins and build-up of iron ore inventories," Fitch says.
At the same time, it says metallurgical coal supply has improved as Australian production recovered and Russian producers redirected some of their output from Europe to Asia.
"However, the market prices for met coal have bottomed out, while some hard coking coal producers started diverting sales to the thermal coal market, which benefits from high demand and pricing," Fitch observes.
Its medium- and long-term views of the iron ore and met coal markets remain unchanged.
Fitch has also cut its nickel price assumption for 2022, reflecting subdued demand from the stainless steel sector, while production levels remain healthy, particularly in Russia and Indonesia.
However, it says long-term demand from electric vehicle production should support longer-term nickel prices.
Source:Kallanish
