India Ratings expects base metal prices in 2021 to be higher year-over-year (year-over-year), driven by a robust recovery in demand amid a gradual increase in l ‘offer. Growing environmental concerns and emission targets are likely to increase global cost curves for metals, the rating agency said. Geopolitical relationships and currency movements are also likely to be the main drivers of metal prices, he observed. Here is a brief summary of the India Ratings report.

Accelerate demand growth to maintain

The current strong global demand for commodities stems from continued strong demand from China, while other economies are also making a comeback due to the impacts of the pandemic. China, which holds the lion’s share of global consumption of key commodities, is expected to experience strong demand in 2021 thanks to continued government-led infrastructure spending.

Tight supply-demand equation

Improving global demand for raw materials will be offset by incremental capacity additions, although intermittent blockages in some producing countries would cause temporary disruptions. In addition, sustainability and decarbonisation efforts are likely to lead to capacity reductions. Logistics and supply chain management remains an issue and also supports cost inflation. However, the tight supply and demand equation in 1H21 should ease in 2H21.

Copper market, marginal surplus

The copper price assumption for 2021 is higher year-on-year due to the tight supply-demand equation for concentrates, while supply-side risks persist with contract renewals for concentrates. work due to Chile and Peru. Thus, the refined metal could remain marginally in surplus by the end of 2021. In the medium and long term, copper prices will be supported by the gradual energy transition which would result in increased use of copper in cables, electric vehicles, transformers, recharging infrastructure and wind turbines.

Article first published: Tuesday July 20, 2021, 11:12 AM [IST]