https://www.miningweekly.com
Automotive|Coal|Construction|Copper|Energy|Gas|Gold|Iron Ore|Oil And Gas|Oil-and-gas|Stainless Steel|Steel
Automotive|Coal|Construction|Copper|Energy|Gas|Gold|Iron Ore|Oil And Gas|Oil-and-gas|Stainless Steel|Steel
automotive|coal|construction|copper|energy|gas|gold|iron-ore|oil-and-gas|oilandgas|stainless-steel|steel

Global GDP to contract 1.9% this year, spark commodity oversupply, says Fitch

6th April 2020

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

Font size: - +

Owing to unprecedented lockdown in much of Europe, the US and across the globe, the world is currently experiencing considerably lower economic activity, which, in turn, significantly reduces commodity consumption, says ratings agency Fitch Ratings.

As a result, it expects global gross domestic product (GDP) to contract by 1.9% this year and says this will translate into a 6% year-on-year decrease in global copper demand.

Although production disruptions in Peru, Chile, Mexico and Canada will remove significant volumes from the market, Fitch Ratings still expects meaningful copper oversupply during the year.

The consultancy has, therefore, reduced its price assumptions for the metal to $5 300/t in 2020 and $5 800/t in 2021.

The aluminum market is also expected to be oversupplied owing to weaker automotive production and construction and the growth of low-cost Chinese primary aluminum capacity.

Low energy costs and the devaluation of local currencies will enable aluminum producers to compete more aggressively, thereby putting pressure on short-term prices, which Fitch Ratings has cut to about $1 560/t in 2020, and $1 600/t in 2021.

Further, nickel prices are sensitive to weaker demand from sectors that consume stainless steel (such as home appliances, construction, the chemical industry, oil and gas facilities) and the spread of the coronavirus.

Fitch Ratings’ price assumption for nickel, taking this into account, is reduced to $11 500/t in 2020 and $13 250/t.

Short-term zinc prices are also under pressure from growing inventories, while global demand is dropping and creating a larger-than-anticipated oversupply barring any major mine disruptions.

Fitch Ratings has cut its 2020 price forecast to $1 900/t zinc to reflect these short-term market imbalances.

Thermal coal assumptions for 2020, meanwhile, have been trimmed for both Newcastle and Qinhuangdao benchmarks owing to lower-than-expected energy demand.

Although South African and Indonesian producers will temporarily halt or reduce their production of thermal coal, Fitch Ratings says these supply cuts will not be enough to offset declining demand. The Chinese market still remains oversupplied, but its coal consumption is gradually recovering.

Assumptions for gold, hard coking coal and iron-ore are unchanged, as supply and demand remain in line with previous expectations.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Condra Cranes
Condra Cranes

ISO-certified Condra manufactures overhead cranes, portal cranes, cantilever cranes and crane components: hoists, drives, end-carriages, brakes and...

VISIT SHOWROOM 
Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.161 0.195s - 89pq - 2rq
Subscribe Now