According to Fitch Solutions, steel and other metals producers will have a more favorable pricing environment in 2021, as prices for almost all minerals and metals will be higher on average this year.
“In 2021, prices will be supported by a deeper recovery in the global economy as vaccines against Covid-19 become available,” Aurelia Brich, head of Fitch Commodity Analysis, said during a webinar she monitored Wednesday. “We expect steel prices to rise by 7% this year over last year.”
Access to the vaccine will also help reduce disruptions to operations. As such, mining and steel operations will improve in 2021 after significant disruptions occurred in the sector in 2020 due to government-imposed isolation measures and stricter health and safety protocols.
“The only exception this year will be iron ore prices, which we expect to fall in the first half of 2021 but remain high after emerging as the clear leader among the commodity sector in 2020,” Britsch said. “This is due to the expected increase in production and supply from manufacturers such as Brazil.”
On the demand side, Fitch Solutions projects a sharp rebound in global minerals and metals demand in 2021. The depreciation of the US dollar, predicted by the Country Risk Group in the medium term, will also be a tailwind for commodity prices.
“Steel consumption in China will remain high as infrastructure projects continue to develop with government policy support,” Brich said when prompted by Callanish. “Demand is still high, stocks are full, and we expect the country’s GDP to grow strongly this year to 10.2%, up from 1.9% in 2020.”
The agency concluded that demand for steel will be sharper in the US, EU, Japan and India.
As overall steel prices, production and consumption will improve in 2021, Fitch Solutions’ outlook for metal producers for 2022 is also positive.