The Strategist

Fitch raises global metal price forecasts

11/24/2021 - 08:33

International rating agency Fitch Ratings has raised its outlook on the value of metals over the coming years, according to a new report from the agency.

Fitch forecasts the spot price of nickel on the London Metal Exchange (LME) at the end of the current year at $18.25 thousand per tonne instead of $16.5 thousand. The forecast for next year has been raised to $16,000 from $15,000 per tonne, while for 2023, 2024 and 2025 the figures were been kept at $14,000, $14,000 and $15,000 respectively. The agency attributes the maintenance of the medium- and long-term forecasts to the risk of increased supplies from Indonesia.

Fitch raised zinc price forecasts for 2025 to $2.9 a tonne from $2.8 thousand for the current year, $2.9 from $2.4 thousand in 2022, $2.5 from $2.1 thousand in 2023, $2.2 from $2.1 thousand in 2024 and 2025. The agency raised zinc price forecasts due to growing global demand.

The aluminium spot price is forecast to reach $2.45 per tonne by the end of the current year, up from a previous forecast of $2.2 thousand. Forecasts for 2022-2025 have also been raised: to $2.5 thousand from $2 thousand per tonne in 2022, to $2.5 thousand from $1.9 thousand in 2023-2024, and to $2.25 thousand from $1.9 thousand in 2025. Fitch attributes the increase in forecasts to strong underlying factors, namely the reduction in production capacity and the persistence of deficits in 2021-2022.

The agency forecasts that copper at the LME will cost $9.25 a tonne this year instead of the old forecast of $9,000, and in 2022 the metal will fall to $8.5 thousand from the previous forecast of $7.5 thousand. In 2023, copper will cost already 8 thousand dollars against the old forecast of 6.7 thousand, forecasts for 2024-2025 improved to 7.5 thousand from 6.7 thousand dollars per ton. The agency notes strong demand for the metal and very low levels of reserves.

The average gold price has been raised within the forecast period, with the precious metal now expected to reach $1.8 thousand per troy ounce this year instead of the previous forecast of $1.7 thousand, next year it will be $1.6 thousand against an old forecast of $1.5 thousand. In 2023, the price of the metal will be $1.4 thousand instead of $1.2 thousand, and in 2024-2025 - $1.3 thousand instead of $1.2 thousand expected earlier. The agency attributes the new forecasts to gold's role as a more reliable asset for investors.