Mining companies and metal producers are likely to see a more favorable pricing environment in 2021. Fitch Solutions predicts the prices of almost all the metals, except iron ore, to average higher in 2021 on a year-on-year basis.
At the beginning of the year, metals recorded a decline due to the covid-19. However, metal prices experienced an impressive recovery during the second quarter of 2020. In its latest report, the UK research and industrial analysis group noted that in 2021 prices would be supported by a broader and deeper global economic recovery as Covid-19 vaccines become available. Access to vaccines will also help reduce disruptions of operations seen in 2020. Particularly in several key mining countries such as Peru and South Africa.
Fitch says the sector experienced significant disruptions in 2020 due to government lockdown measures and stricter health and safety protocols. Still, mining and metals operations will improve in 2021.
Decarbonization strategies and ESG initiatives accelerate metal demand
Meanwhile, Fitch forecasts a strong recovery in global demand for minerals and metals in 2021. China’s metal consumption will stay strong as infrastructure projects continue to advance, supported by the Covid-19 stimulus policy.
Other countries that saw their mining and metals operations interrupted and impacted by lower final demand will see a sharper recovery in production.
Fitch notes that while it is a long-term, slow-burning trend in nature, the continued acceleration of decarbonization strategies and ESG initiatives means demand for some metals used in renewable energy and electricity infrastructure. Batteries and catalysts in vehicles with platinum and palladium components could be supported in 2021 and beyond.
Overall prices, production, and consumption of metals and minerals will increase in 2021. The outlook for metal miners and producers is optimistic for next year, Fitch says.
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