Financial risk management, solutions and insight company Fitch Solutions’ “Country Risk and Industry Research” report stated that as the epidemic continues to develop and the virus spreads globally, the mining and metal industries are being severely affected by the new crown epidemic.
The company pointed out that in terms of minerals and metal production, due to strict measures implemented by governments, the new crown restrictions and related blockades disrupted global mining operations and mineral production growth in the first half of this year.
Fitch Solutions also predicts that there will be more confusion in the months before the vaccine is launched.
Therefore, the company said that these factors will lead to a decline in global mineral and metal production this year compared to 2019.
As a result, Fitch Solutions lowered its production growth forecasts for many major mining countries and said that, in addition to other commodities, global mine production such as copper, nickel and coal may decline.
The company expects the growth of iron ore to stagnate. Fitch Solutions said that in terms of mining jurisdiction, Peru, Chile, India and South Africa are among the most affected countries, while mine operations in other key countries such as Australia, Russia and China continue without major obstacles.
Most mining companies continue to pay attention to labor safety and take measures, such as reducing the frequency of "flying in and flying out". In addition to some companies temporarily suspending production completely, some companies also announced that they are reducing production capacity to increase social distance with workers.
The demand for minerals and metals will also be affected this year. The company pointed out that the recovery of the global economy from the new crown epidemic is uneven and challenging-as the pandemic continues to spread in major demand markets, these factors are becoming a reality, which may delay the rebound in demand.
Fitch International also predicts that the global economy will shrink by 4.2%, leading to a sharp decline in physical demand for minerals and metals this year, due to slower growth in global consumers, automakers and infrastructure industries.
However, the company pointed out that after the new crown blockade, China's strong recovery in demand for minerals and metals will continue in the second half of this year. This will partially offset the reduction in consumption in other markets.
In terms of metal prices, Fitch International pointed out that metal prices have performed strongly in recent months, and copper prices have risen, which completely recovered the losses caused by the pandemic earlier this year.
"Gold and iron ore prices are the two best performers so far this year," Fitch Solutions said.
In this regard, the company said that it is still optimistic about the prices of base metals and gold, and expects that the prices of ferrous metals and metals (steel and iron ore) will stabilize at their current high levels in the coming months.
In addition, the company said that China's continued V-shaped recovery and its emphasis on infrastructure investment have accelerated China's metal demand.
As far as the metal-specific impact is concerned, the company predicts that due to the involuntary business interruption (blockade) and voluntary capacity cuts caused by the new crown epidemic, supply will decrease in the short term.
The apparent weakening of the demand outlook means that Fitch Solutions currently predicts that the global oversupply will be more serious and will last longer than previously expected. The most serious damage to global supply and demand caused by the epidemic occurred in the second quarter, and there will be a slow recovery in 2021.
The company's conclusion is: "Due to the uncertainty of the duration of the new crown epidemic, our risk balance for price prediction lies in the downward trend."
