ABN Amro vurderer, at metalpriserne vil stige i 2021 efter et dårligt 2020, fordi der globalt kommer mere gang i økonomien. Der er voksende efterspørgsel efter stål, og udbuddet er beskedent. Kobberprisen ventes kun at stige svagt, mens der ventes langt bedre priser på nickel på grund af den kraftige vækst i el-bilproduktionen.
The corona crisis had a major impact on the metal sector in 2020. Demand for industrial metals weakened abruptly, while a supply response only started late. This resulted in higher inventories. Fortunately, this did not turn into a millstone for the sector.
After all, the resilience of the industrial activity proved to be high. Today, we see that the global recovery is becoming more and more widely supported. The economic recovery is gaining strength, demand for metals is increasing and sentiment about industrial metal markets is optimistic. Under these circumstances, metals prices will continue to rise in 2021.
- Higher steel prices due to demand recovery, higher input costs and supply constraints
- Iron ore price remains relatively high and Australian coking coal price is rebounding
- Base metal prices follow the economic cycle closely
Steel: stronger metal demand and lower supply drives up prices
Demand for steel-intensive consumer goods – such as cars and white goods – is currently strong in several markets. Market sentiment is good and activity is improving better than expected. In particular, car sales in China have increased very strongly in the last five months of 2020. Demand recovery in Europe and the US is somewhat slower but on the way back. Many end users of steel are restocking more intensively. As a result, supply is struggling to keep up with the rapid recovery in demand. Price increases are the result. The increased costs of making steel – mainly due to the higher prices of iron ore and scrap metal – also contribute to higher steel prices. Next year, steel prices will remain relatively high.
Iron ore: price remains relatively high this year
The strong Chinese demand for and limited supply of iron ore was the reason for the rising iron ore price. China’s steel production grew strongly in recent months and iron ore stocks decreased. In addition, both Australia and Brazil were struggling to meet the stronger growth in demand, mainly due to the influence of extreme weather (heavy rainfall and tropical storms). Demand for good quality iron ore remains high worldwide. Price risks come mainly from the supply side. In any case, the current high price is an invitation for metal mining companies to produce more. A recovery in supply will bring a reduction in price in the course of the year. But on balance, the price of iron ore remains relatively high this year.
Coking coal: price recovery on the horizon
The Chinese import restrictions on coking coal from Australia are causing a persistently low Australian price of coking coal. Demand for Australian coking coal from India, Japan, Taiwan and Vietnam is increasing, but does not cause a reversal in the price trend. On balance, the supply of coking coal from outside Australia (such as Russia, Mongolia and China) is tight. This means that existing trade flows are subject to change. For example, China is buying more coking coal from Canada. Despite the fact that the weather phenomenon La Nina will weaken further in the coming weeks, heavy rainfall is still expected. This will put pressure on the supply from Australia and will result in a higher price. The increasing global demand for coking coal due to recovery in the steel sector will also contribute to price recovery.
Aluminium: price will maintain its relatively high level in 2021
China is normally a net exporter of aluminium and imports are almost insignificant. In 2020 this picture tilted. Due to strong domestic demand for aluminium, export volumes decreased and aluminium imports increased sharply. The Chinese rebound in demand is mainly due to strong catch-up demand from the automotive sector and targeted Chinese economic support packages in the construction sector. Demand also recovered in Europe, the US and Japan. The price passed the USD 2,000/t. The order books for aluminium sheets are solidly filled for the first quarter of 2021. It keeps this year’s prices relatively high. A downward price risk is in the air when Chinese stimulus spending stops. Then China becomes a net exporter of the metal again.
Copper: price rises in 2021 but in a lower gear
The copper price breaks record after record. At the end of 2020 the peak of June 2018 was settled and in the first few days of 2021 the price is heading towards the peaks of 2012 and 2013. The list that gives reason to higher prices is long. The weaker dollar, a shortage of copper, the global economic recovery, the start of vaccination, the continued growth of Chinese industrial activity and supply constraints from Chilean mines. It gives a lot of confidence. As a result, total long positions are high, but this brings a downside price risk at the same time. The likelihood of profit-taking by speculators is then greater. In 2020, the market has taken a substantial advance on the good news of 2021. The price of the metal will rise further in 2021, but in a lower gear.
Nickel: expectations around electric car keeps price high
The new year is still short, but the nickel price has risen already by about 8%. And that while the market is in surplus. Optimism is widely supported in the nickel market. Much is due to the expectation of sustained long-term demand from the battery sector. This is fuelled by a further increase in sales of electric cars. This will accelerate in the coming period. In order to revitalize economic growth in the post-Covid-19 era and also reduce CO2 emissions, many governments around the world are unveiling green incentives. As a result, the price will remain relatively high. However, the stainless steel sector has been hit hard by the Covid-19 crisis with sharp declines in metal production. A strong recovery in the short term on a global base is unlikely.
Zinc: despite a surplus in 2021, the price may still rise slightly.
The zinc market was oversupplied in 2020 and stocks increased at the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE). Nevertheless, the price rose significantly in 2020. The positive macro-economic narrative was more the guideline for prices than the reports on the negative supply and demand balance and high inventories. Demand for zinc fell sharply in 2020 as a result of car plant closures. Demand also fell sharply in the construction industry – where a lot of galvanized steel is processed. However, global activity in both sectors will pick up again in 2021. This is a positive trend for the demand for zinc. A surplus of the metal is still on the agenda for 2021, but this is expected to be relatively low. The price of zinc will continue to rise in 2021, but at a slower pace.