International credit rating agency Moody’s Investors Services has announced that it has lowered its 12-month price assumptions for metals and mining commodity prices due to weakening demand resulting from the global economic slowdown.
The price assumptions reflect Moody’s expectations that G-20 economies will decelerate to 2.5 percent growth in 2022 and 2.1 percent in 2023, from 5.9 percent in 2021.
According to Moody’s, over the next 12 months China’s domestic hot rolled coil (HRC) prices are expected to decrease to $600/mt from the previous estimation of $750/mt, Brazil’s HRC prices are foreseen to fall from the previous estimation of $1,000/mt to $800/mt. In addition, steel prices in Europe are forecast to decrease to $750/mt from $1,100/mt, while US HRC prices are expected to fall from the previous estimation of $1,150/mt to $800/mt.
The agency has decreased its coking coal price assumptions to $220/mt for the next 12 months from the previous estimation of $275, while thermal coal is expected to be at $250/mt compared to the previous estimation of $150/mt.
Moody’s also points out that supply will stay tight for most base metals during the coming 12 months, as production has not kept pace with demand during the past two years. Supply-chain snarls have also disrupted production across the metals and mining sector.
“China is a major consumer of base metals, coal and iron ore, and the largest steel producer globally. A slowdown in the country's economic growth would reduce demand across the metals and mining sector. Prices, which have been volatile, are decreasing from the peaks of late 2021 and early 2022 but will remain historically high,” Barbara Mattos, Moody’s Investors Service senior vice president, said.