Fitch has a positive outlook for copper, iron ore and coal in 2024
Fitch has a positive outlook for copper, iron ore and coal in 2024

14 December 2023 – Fitch Ratings has updated its outlook for raw materials. The analysts have a positive outlook for copper, iron ore and coal in particular. And in the EU in particular, there is likely to be an increasing shortage of stainless steel scrap. The recycling industry is hoping for rising prices. But is the nickel price the decisive factor? Or rather the pricing policy of EU scrap consumers?

Fitch takes a positive view of the future for copper, iron ore and coal

Copper prices: Rising demand and supply bottlenecks

Fitch has adjusted its forecast for copper for 2023 and expects even higher demand in 2024 – thanks to the metal’s important role in the energy transition. But beware: supply bottlenecks, as recently seen with First Quantum’s Cobre Panama, could tighten the market.

Iron ore on the upswing

Fitch expects iron ore prices to rise in the short term, driven by the current price trend and an expected restocking in 2024. China’s plans to coordinate all iron ore purchases are unlikely to be realised in the short term – there are too many brokers involved. Prices will remain high in the medium term as capacity expansions take longer.

Hard coal coke more expensive due to production costs

The production costs for hard coal coke are rising, and with them Fitch’s short-term price assumptions.Added to this are supply interruptions and continuing demand from the steel industry, particularly from China.

Thermal coal: less investment, higher prices

Things are also looking good for thermal coal:Prices are rising in both Australia and China.Less investment in mining means less production and mitigates the impact of falling demand. Global seaborne markets are shrinking faster than the Chinese domestic market. Plus: Higher production costs, particularly in Australia, are supporting prices.

To summarise: Everything more expensive, but market stable

Overall, Fitch sees a stable to rising price trend for copper, iron ore, hard coal coke and steam coal.

Nickel price forecast lowered slightly: But stainless steel remains stable

Despite Fitch’s slightly lowered nickel price forecast for 2024: No impact expected on stainless steel prices in Europe and North America.

European stainless steel mills rely on scrap

In the EU, stainless steel mills use 90 to 94% stainless steel scrap and only a small proportion of ferrous scrap in their electric arc furnaces (EAFs). So: Availability and prices of stainless steel scrap will continue to set the tone – regardless of what the alloy surcharges try to suggest.

India and China follow suit for scrap

Stainless steel giants in India and China have also announced plans to significantly increase their scrap quotas.This could further fuel the trend of shipping stainless steel scrap to Asia rather than to the European Union.

Market distortions for stainless steel scrap in the EU?

The massive and market-distorting price pressure exerted by EU mills on purchase prices, especially for stainless steel scrap, which has been mentioned frequently in Brussels and Berlin in recent months and described as possibly relevant for the antitrust authorities of the EU member states, could also drive up prices in Europe due to the increased demand in Asia.

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