In response to evolving market dynamics, Fitch Ratings has revised certain price assumptions in the global metals and mining sector.
According to Fitch Ratings, the adjustments are reflective of changes in production, demand-supply balances, and market conditions across key commodities.
Fitch Ratings has increased its thermal coal price assumptions, citing falling production levels due to reduced investments.
The adjustment considers the gradual contraction of the global seaborne market in comparison to the Chinese domestic market.
Lower investments in thermal coal mining are expected to curtail production, acting as a mitigating factor against shrinking demand and moderating the pace of price decline.
The rise in coal production costs, particularly in Australia, is foreseen to provide additional support to prices.
The rating agency has raised iron ore prices for the period 2023–2026. The adjustments for 2023–2024 account for year-to-date re-stocking and a favourable supply-demand balance in the medium term.
The re-stocking expectation in 2024 is attributed to low inventory levels.
Notably, plans to co-ordinate iron ore purchases in China, aimed at offsetting price increases, are not anticipated to materialise in the short term due to the involvement of numerous brokers.
Medium-term price assumptions reflect the extended time required for capacity additions to reach the market, thereby avoiding oversupply concerns.
Fitch Ratings has increased coking coal assumptions for 2023–2024, considering year-to-date prices and elevated production costs.
The assumptions also factor in seaborne supply disruptions triggered by adverse weather conditions. Sustained demand from the steel industry, particularly in China, is expected to contribute to price stability.
The copper price assumption for 2023 reflects year-to-date pricing, while the higher 2024 assumption takes into account steady demand growth amid the metal’s crucial role in the energy transition.
Potential supply interruptions, such as those witnessed at First Quantum’s Cobre Panama operations, could lead to a tighter market balance or small deficits.
Fitch Ratings has reduced its 2024 nickel price assumption due to a short-term surplus resulting from lower demand in China’s stainless steel production.
The market is expected to remain well supplied, driven by increased Class 1 nickel output in 2024, exerting downward pressure on prices.
Asian News International