Rating firm, Fitch
Sustained stimulus in China and an industrial recovery in developed countries should support demand for base metals and steelmaking raw materials in 2024, Fitch Ratings has said.
“Our neutral sector outlook also reflects governments’ spending programmes in China, Europe and the US to support the energy transition and infrastructure developments that require metals,” the global rating agency said.
In the note, Fitch analysts expect demand for base metals to increase in 2024.
“We estimate that global consumption of copper will increase by 2.7% due to its role in the energy transition, and although there is likely to be sufficient mine supply, smelter capacity will constrain copper production until 2025 at least, leading to a tightly balanced market in 2024.”
The rating note reads that Aluminium demand in China will continue to increase in 2024 after higher-than-expected growth of 3.7% in 2023, particularly due to demand from renewables, while consumption in the rest of the world will recover after a decline in 2023.
The market is likely to be more balanced in 2024 than in 2023, according to Fitch.
Analysts expressed that battery production will be key to nickel consumption growth in 2024 as demand from the stainless-steel sector is slowing, linked to slower global GDP growth and a weaker property sector, particularly in China.
However, the broader market will remain in surplus over 2024-2026, according to CRU, as new processing capacities come online, primarily from Indonesia (the world’s largest nickel producer), to supply various market segments (class 1, sulphates, nickel pig iron and ferronickel).
There is some potential for a reduction to oversupply, given a recent clampdown on illegal mining and delays to the allocation of new mining quotas in Indonesia.
Zinc demand should expand by 3.4% in 2024, after a 0.4% contraction in 2023, according to CRU. Growth in 2024 is likely to come from Europe, India, Japan, Korea, the US and Vietnam, while Chinese consumption growth will slow from 2.8% in 2023 to 1.6% in 2024.
The market will remain in oversupply due to ongoing global refined zinc production expansion of 3.1% and 3.0% in 2023 and 2024, respectively, according to CRU.
Demand for iron ore and metallurgical (met) coal will remain broadly flat in 2024, supported by steel production recovery in most global markets, excluding China.
The need to restock iron ore throughout supply chains in China and the EU will keep the iron ore market tight in 2024.
India will lead demand growth for met coal, along with Vietnam and Indonesia, offsetting lower consumption in China.
“We expect the met coal market to be tightly balanced in 2024 as higher demand from growing markets will be closely matched by an increase in supply from Australia’s new projects and restarts of idled capacity”.
Global thermal coal seaborn trade volumes are likely to peak in 2023, mostly due to a sharp increase of China’s imports, and will decline by 7.4% in 2024, according to CRU. Naira Devaluation Deepens Economic Crisis in Nigeria
Demand will be constrained by the energy transition. Developed economies including the EU, Japan and South Korea are likely to continue to import less in 2024.
Changes in monetary policies and geopolitical conflicts will remain key drivers of investment demand for gold. Rising interest rates have weighed on demand.
Conversely, the wars between Russia and Ukraine and in the Middle East, and geopolitical tensions between the US and China, are driving safe-haven demand.
In addition, increasing expectations that US interest rates may have peaked and that inflation is moderating have weakened the dollar and increased demand for gold.
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