The metals and minerals price index rose 10% in the first quarter of this year, compared with the final quarter of 2022, the World Bank’s latest ‘Commodity Markets Outlook’ report shows.

It says this reflected optimism for a strong recovery in China and improved global growth prospects at the start of the year.

All metal prices, particularly iron-ore and tin prices, were higher for the quarter.

However, this optimism waned, and most prices receded from their January highs by the end of the quarter.

Only iron-ore prices remained firm, owing to strong demand from China’s steel sector.

A short-lived price spike in January was fuelled by expectations that the end of China’s zero Covid-19 policy would push demand higher, as China accounts for about half of the global consumption of base metals.

However, prices declined in March, largely because of weakening global demand, the report points out.

The precious metals index increased by 9% in the first quarter of the year, driven by a weakening dollar, safe haven buying following banking stress in the US and Europe, and strong industrial demand for platinum and silver.

Coal prices fell in the first quarter of the year as additional production was about three times the level of additional consumption.

The supply gap triggered by the European ban on coal imports from Russia was filled by Colombia, Indonesia, South Africa and Kazakhstan.

Global coal consumption reached an all-time high in 2022.

In terms of production, in 2022, production is estimated to have risen globally in response to higher prices.

However, in South Africa, output declined owing to labour unrest and railway disruptions.

Critical mineral prices have been volatile over the past two years, reflecting thin and segmented markets, the report indicates.

Lithium prices declined by nearly 35% in the first quarter of the year from the previous quarter partly owing to the global economic slowdown and the termination of a decade-long electric vehicles subsidy initiative in China.

The World Bank’s precious metals index increased by 9% in the first quarter of the year, driven by a weakening dollar, increased geopolitical tensions and inflationary pressures, as well as strong industrial demand for silver and platinum.

Potential decisions by central banks to hold more gold is a key upside risk for gold prices, while supply constraints may lead to higher silver and platinum prices, the report says.

OUTLOOK

Coal prices are forecast to fall 42% this year and 23% in 2024.

The anticipated increase in demand from China is likely to be offset by weaker demand elsewhere, as utilities switch back to natural gas, the report states.

Exports from major producers (particularly Australia and Indonesia) are anticipated to rise.

Metals and minerals prices, which briefly increased in January, are expected to fall by 8% this year relative to last year and by a further 3% in 2024.

Global demand in manufacturing is expected to remain weak, and China’s recovery is expected to be heavily services-oriented.

Strong supply growth is projected over the forecast horizon, supported by a recovery from production outages and new mines coming on stream for key metals (copper, nickel and zinc).

Precious metals prices are expected to increase by 6% in 2023 as safe-haven demand rises amid elevated uncertainty with respect to future growth prospects, ongoing concerns about inflation, and financial stress in the first quarter.