India
Ind-Ra
has published the Metals and Price Deck 2021 report that contains a detailed
review of copper, aluminium, zinc and thermal coal, the supply situation,
demand movement, balance between demand and supply, pricing levels, possible
disruptions, and an insight on the domestic industry. This is not a price
projection but more of a guidance on the price points that will be applied by
Ind-Ra’s in its base case financial projections.
The
global commodity demand improvement will be balanced by gradual capacity
additions, although intermittent lockdowns in certain producing nations would
cause temporary disruptions. Also, sustainability and decarbonisation efforts
are likely to lead to capacity curtailments. Logistical and supply chain
management remains an issue and also supports cost inflation. However, the
tight demand-supply equation in 1H21 is likely to ease in 2H21.
The copper price assumption for 2021 is higher yoy due to the tight demand
supply equation for concentrates, while supply-side risks persist with labour
contract renewals due in Chile and Peru.
Zinc prices for 2021 are projected higher yoy, led by a strong recovery in
global demand for galvanised steel. However, the mined zinc concentrate supply
will gradually improve and marginally impact the prices over 2H22.
The aluminium price assumptions for 2021 are higher, on account of the
continuance of a strong demand from China while other countries are gradually
increasing the usage over 2021 yoy.
The thermal coal price assumptions for 2021 are higher yoy, on account of the strong Chinese demand amid low domestic inventories, gradual demand recovery ex-China, and supply constraints. Indonesia, the largest exporter of thermal coal, is exporting higher volumes to China, considering the Chinese ban on Australian imports.
Source: India Ratings & Research
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