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Senior Vice President, Vice Chair Metals and Mining
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We enter 2021 with many mined commodity prices riding high after recovering from a dramatic pandemic-induced slump in H1 2020. But far from marking a new atmosphere of positivity, the new year brings new questions. How will Chinese policy affect supply and demand in 2021? Will the growing rhetoric around decarbonisation be followed up with concerted global action? And could fiscal stimulus tied to metals-intensive green investment herald the dawn of a new global supercycle, or is it too early to celebrate?
Our new report provides expert commentary on these and other key questions affecting metals and mining in 2021. Complete the form for a complimentary copy, or read on for a preview of some of our key talking points.
Aluminium – the rise of green metal?
The pandemic-driven collapse in demand left the aluminium market with a sizable surplus in 2020. This could be another year of rising stocks and the dominance of Chinese ‘green’ aluminium. But how far will US policy decisions impact both domestic and international industry?
Battery raw materials – EV sales could accelerate demand
Electric vehicle sales grew 38% in 2020, despite the pandemic. We expect strong growth again in 2021, supported by governments around the world targeting a 'greener' recovery from the current downturn. Battery raw materials should see a surge in demand as a result.
But with a wider choice of vehicles using a greater range of chemistries, which metals will be the big winners and which will stall?
Copper – can purchasing levels be sustained?
In H2 2020, the manufacturing sector registered a rapid recovery due to demand for consumer durables as the world adapted to home working. It remains to be seen if purchasing levels can be sustained through 2021. And will the world’s focus on an accelerating energy transition add further price support to an already hot metal?
Gold – replenishing reserves will be vital
Prices and sentiment are high for gold. But with a fall in mine supply around the corner, reserve replacement is a must.
But it can’t come at any cost; with average emissions per tonne of gold around 25kt the industry needs to take action. Will this be the year we start to see a market bifurcating based on green credentials?
Lead – limited stocks could further dwindle
Li-ion may be the favoured battery technology for EVs but almost all models still also use lead batteries (albeit with 35-60% less lead intensity than in an ICE) so the future seems bright. But with scrap supply at risk due to the weather and coronavirus lockdowns, and with smelters struggling to keep up with demand from battery makers, can the lead industry keep the lights on?
Nickel – Indonesia is shaping the market
The nickel story is really all about Indonesia: its export ban on nickel ore is expected to reduce Chinese nickel pig iron (NPI) production by almost 40% in 2021. But this should be more than offset by domestic supply coming online.
At the same time Indonesia is also embarking on a journey to become a major hub in the battery supply chain. All eyes are on Indonesia’s next move.
Zinc – Chinese smelter production is the key variable
Given that just under half of the world’s capacity is in China, how the country’s smelters perform and their appetite for imported concentrate will have a large impact on prices through 2021.
Meanwhile, with electricity typically accounting for 40-50% of smelting costs we will see zinc smelters seeking to reduce carbon emissions through increased use of renewables. Who will take the lead on ‘greener’ zinc?
Steel – post-pandemic stimulus could drive demand up
Chinese demand remains the biggest risk to our view – but growth shows no signs of slowing. Further upside exists if global demand is boosted by post-pandemic stimulus and the new US administration pursues investment in steel-intensive infrastructure.
However, with the industry responsible for around 10% of global emissions will this be the year we see material action on decarbonisation?
Metallurgical coal – Australia’s import ban could determine global price and trade flows
2020 brought enormous changes to the metallurgical coal markets, not least demand erosion from the pandemic and the Chinese ban on Australian imports.
Looking ahead, China may be entering a post-peak steel era, but will anyone notice? Solid local demand and the potential for increasing exports mean production growth is still a possibility. Meanwhile, at a global level could lower prices see production leave the market and lead to later supply shortfalls?
Iron ore – Chinese demand remains the key driver
2020 was full of surprises for iron ore: despite a global recession, prices doubled, and the majors enjoyed their highest margins since the boom of 2010-2012. However, with prices riding high, will China-Australia trade tensions and overseas mining projects reduce China’s reliance on foreign-owned imports and cool the outlook?
Thermal coal – off to strong start, but it may not last
A prolonged cold snap in the northern hemisphere coupled with easing Chinese imported coal restrictions has seen demand and prices soar in early 2021. But could producers overshoot the supply response? Will China’s Australian coal ban continue to distort traditional seaborne trade flows? And how will coal be affected in the longer term as carbon reduction policies spread?