MANILA, Philippines — Global metals and mining prices are expected to increase largely due to higher post-pandemic demand, tight markets, and short-term supply disruptions, particularly due to the Russia-Ukraine conflict, according to Fitch Rating.
In its latest commentary, Fitch Ratings raised its price assumptions for metals and mining commodities for 2022 until 2025.
While most of the price assumption increases made were for this year and next year, Fitch Ratings said some commodities are also seen to benefit from increased longer-term demand due to their role in global decarbonization.
Fitch Ratings revised its price assumption for copper to $9,500 per ton from its initial assumption of $8,500 for this year.
The price assumption for copper was also increased to $8,500 per ton from $8,000 per ton for 2023.
“Copper is the only commodity where we increased our long-term assumptions due to its use in electrification,” Fitch Ratings said, citing its new long-term projection of $7,000 per ton compared to the earlier $6,700 per ton.
“The revised short-term prices reflect very low global stocks, a balanced market and current and potential supply disruptions, particularly due to water stress in Chile and socio-political protests in Peru,” Fitch Ratings said.
It said the proposed new laws in Chile and Peru to introduce higher industry taxes could slow investments in copper mining, limiting supply in the medium and long term.
In addition, Fitch Ratings pointed out that Russia accounts for four percent of both mined and refined copper, so the Ukraine conflict and related sanctions may affect availability.
Fitch Ratings also increased its price assumptions for iron ore for this year to $110 per ton from $90 per ton.
“The increased iron ore price for 2022 reflects healthy demand, boosted by extended Chinese government support to infrastructure, and lower production earlier this year due to heavier-than-usual rains in Brazil, exacerbated by implications of the Russian-Ukraine conflict on iron ore exports. Our assumptions for other periods are unchanged,” Fitch Ratings said.
Price assumptions for aluminium were also increased for 2022 and 2023 to $2,950 per ton and $2,600 per ton, respectively.
Fitch Ratings attributed the upward adjustment to high energy prices, which pushed up marginal costs of energy-intensive aluminium production.
“High energy costs have already led to some production curtailments in Europe, enlarging the forecast global deficit in 2022,”Fitch Ratings said.
Meanwhile, Fitch Ratings also increased its short and medium-term zinc price assumptions, driven by increased risks of European smelter disruptions due to the Russian crisis and higher energy costs, leading to a larger forecast deficit of refined zinc in 2022.