Demand for minerals and metals is expected to increase in 2021

EQUIPMENT

Demand for minerals and metals is expected to increase in 2021

A more favorable pricing environment should be seen by miners and metal producers in 2021, as almost all mineral and metal prices (except iron ore) are projected to average higher yearon-year (y-o-y) in 2021, Fitch Solutions forecasts in its latest report.

While metal prices have recovered impressively over Q2-Q420, following the decline reported at the beginning of the year due to covid-19, Fitch states that prices will continue to fall on average year-on-year basis in 2020. In 2021, Fitch says that the wider and stronger global economic recovery will boost prices as covid-19 vaccines are made available. cinations would also help reduce the disruptions to operations seen in 2020.

According to Fitch, mining and metal operations will therefore increase in 2021, after the sector encountered major disruptions in 2020 due to gov-

ernment-imposed lockdown measures and tighter procedures for health and safety. This was especially the case for the copper sector, as the pandemic had a major effect on Peru and Chile, which account for a large share of the mine's output. The resulting pickup in supply is likely to retain something of a price limit.

Fitch, meanwhile, expects a sharp recovery in global mineral and metal demand in 2021. As infrastructure projects continue to make progress, China's metal consumption will remain high, assisted by the Covid-19 stimulus policy.

Other nations, such as the US, the EU, Japan and India, in the case of steel and aluminium, which have seen their mining and metal operations disrupted and impacted by lower end demand, would see a sharper production recovery.

Fitch states that the continuing acceleration of decarbonisation policies and corporate environmental, social and governance (ESG) initiatives, while a slow-burning and longer-term trend in nature, implies that demand for some metals used in renewable energy infrastructure and for electric vehicle batteries (including copper, nickel and aluminium) could be supported in 2021 and beyond.

The outlook for miners and metal producers is optimistic for next year, Fitch maintains, as overall costs, output and consumption of minerals and metals will increase in 2021.

The decline in input prices expected by Fitch for steel in 2021, due to improved supply (iron ore prices and coking coal), would enable the sector to achieve profitability.

Elevated rates will continue to benefit gold miners. Compared with 2020, Fitch sees mining and metals capital expenditure improving in 2021. Although 2020 forecasts continued to worsen marginally as the pandemic progressed from April to November, the budget outlook for 2021 improved as a result. This move is possibly due to businesses postponing development initiatives from 2020 to 2021 and, in the midst of the pandemic, concentrating on saving cash in the interim.

Other nations, such as the US, the EU, Japan and India, in the case of steel and aluminium, which have seen their mining and metal operations disrupted and impacted by lower end demand, would see a sharper production recovery.