Moody’s Expects Global Steel Supply Demand Imbalance to Return
Strategic Research Institute
Published on :
17 Sep, 2021, 6:01 am
International credit rating agency Moody's has stated that the outlook for the global metals and mining industry is changing to stable from positive with commodity price growth momentum fading out through 2022. In a new report covering iron-ore, steel, coal, aluminium, gold, silver, nickel, copper and zinc, Moody's, states that most prices will exceed historical marks as demand for metals and mining is expected to remain robust throughout 2022. According to Moody’s, prices will retreat from their peak this year as supply increases and demand growth slows. Moody’s Senior VP Barbara Mattos said "We expect industry's earnings before interest, taxes, depreciation and amortisation to increase by about 8% through mid-2022 based on economic recovery supporting demand for base metals, iron ore, steel and coal.”
According to Moody's, iron ore prices will move gradually toward their USD 70-80 per tonne average levels of 2016-19 beyond 2022. Tight iron ore supplies will keep prices above their historical norms through 2022, but prices have retreated sharply from their peaks earlier in 2021 as supplies have increased and demand growth decelerates.
Coal prices are expected to remain high despite easing supply problems as geopolitical disputes ease.
Meanwhile, the global steel supply-demand imbalance will return through 2022 with prices gradually declining toward their historical averages from the unusual highs of 2021. Demand will ebb as buyers replenish inventories, stimulus spending wanes and consumers return more widely to spending on experiences as vaccinations become more widespread. Steel supplies will continue to increase as well, with productivity improving and new capacity coming online in certain parts of the world.
Among the main base metals, aluminium prices will remain elevated through at least mid-2022, and copper prices will remain strong through at least late 2022 compared with historical averages.