Fitch Ratings Updates Several Global Metals and Mining Price Assumptions

Fitch Ratings has raised all assumptions for gold due to a higher geopolitical premium and medium-term and mid-cycle prices for coking coal on tight longer-term supply. We have raised 2024 assumptions for copper and Australian thermal coal, and reduced assumptions for platinum and palladium, reflecting prices so far this year. We have cut 2024-2027 prices for lithium and 2024-2025 prices for cobalt due to slower electric vehicle (EV) uptake. We have increased 2025-2027 zinc prices on higher medium-term demand.

Our assumptions for iron ore, aluminium, rhodium, Qinhuangdao thermal coal and nickel are unchanged due to demand concerns, despite price volatility. Iron ore prices had been supported by demand from China in 2024 but greater Chinese steel production cuts from end-July have started affecting demand.

The increased 2024 copper assumptions reflect higher prices so far in 2024. Spot prices have been declining in September, after peaking at above USD10,000 a tonne in May, due to concerns about the Chinese and global economies, while supply disruptions have been limited this year. China dominates the copper supply chain, accounting for 55% of global copper consumption and about half of global copper smelter capacity. Longer-term copper demand growth is driven by the energy transition, the pace and scale of which are highly uncertain. Copper consumption will depend on EV adoption rates and copper intensity per vehicle, which has been declining markedly.

The increased medium-term and mid-cycle coking coal assumptions reflect tight longer-term supply due to the lack of new large projects and higher production costs. Medium-term demand growth for seaborne metallurgical coal will be covered by incremental increases in output, with markets remaining tightly balanced.

The increased 2025-2027 assumptions for zinc reflect higher demand expectations in the medium term and a gradual reduction in mine supply, primarily due to declining head grades.

The increased gold assumptions, including the mid-cycle price, reflect the higher geopolitical premium due to the metal’s safe-haven status. Gold prices have been resilient to the higher-for-longer interest rate environment and we expect mild rate easing to offer further support.

The reduced short-term assumptions for platinum and palladium reflect lower prices this year, affected by destocking. Once destocking is complete, and if some producers cut production, prices should be supported at the levels incorporated in our assumptions. The increased 2024 assumption for the Australian thermal coal benchmark reflects higher actual prices this year so far and low stocks at Indian power plants.

The reduced 2024-2027 lithium price assumptions reflect weaker demand for EVs. Changes in subsidies, consumer preferences and automakers’ decisions will continue to affect demand for EVs in the US and Europe. Lithium inventory levels have been increasing with some lithium supply being deferred, but this has not yet been sufficient for prices to recover before 2027. Large lithium producers have announced mine curtailments and cost-cutting measures, although mining in China and Africa is still increasing.

Our reduced 2024-2025 cobalt assumptions reflect slower EV adoption, increasing production at Chinese refineries and new mine supply coming on stream in 2025. Weak prices are likely to lead to curtailments and deferrals of refining capacity by smaller non-integrated refiners, particularly those outside China, with prices eventually steadying in line with our medium-term assumptions. Weak demand for cobalt from EVs is partly offset by demand from plug-in hybrids, while demand from portable electronics has been recovering.
Source: Fitch Ratings