Metal prices have recovered from the nadir in April and have surpassed pre-pandemic levels, driven by a swift rebound in economic activity, particularly in China, and supply disruptions in Latin America. Metal prices are projected to gain momentum in 2021, following an expected marginal decline in 2020, according to the October 2020 edition of the World Bank’s Commodity Markets Outlook. Risks to the outlook emanate from the path of global manufacturing activity and the strength of the U.S. dollar.
Swift rebound in metals demand in China., as measured by the Purchasing Managers’ Index. Fixed asset investment has risen for eight consecutive months through October and auto sales jumped 12.5% month-on-month in October, the seventh straight monthly increase. China’s metal demand is expected to remain strong, as investment in “new” energy sectors (including renewable energy) accelerates. For example, wind power installations grew almost 140% over the first nine months of 2020; new electric vehicles sales in October more than doubled from a year earlier; and charging infrastructure investment continues to expand.
China’s manufacturing sector has expanded for seven consecutive months
Recovery in metals demand outside China.as most construction and manufacturing industries remained open even during lockdowns. Similarly, strong demand for home electronics as people transitioned to working from home has boosted consumption of tin.
Metals demand during COVID-19 is more resilient than the GFC
Persistent supply disruptions in Latin America.Production from Vale—the world’s largest iron ore producer—has been derailed by transport and labor disruptions due to the COVID-19 outbreak as well as tougher regulatory requirements following the Brumadinho tailings dam accident in early 2019. Temporary suspension of operations in Chile and Peru due to rising COVID-19 cases boosted copper prices. Similarly, mine production curtailments in Bolivia and Peru supported tin and zinc prices.
Top metal ore producers in 2019