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Fitch Improves Valuation Estimates for Non-ferrous Metals and Gold

The international rating agency Fitch Ratings has updated the estimates of the value of a number of basic metals, which it uses in forecasts of operating activities and financial indicators of companies in the industry.

This includes improved estimates for 2021 for non-ferrous metals and gold. For iron ore, the expected prices were increased for all periods.

“The revision of the prices for railroads is the most significant change and is due to the limited supply, which we expect to remain in the next couple of years, as well as the absence for a long period of significant new projects that could compensate for the depletion of mines,” the agency said in a statement.

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Brazil’s Vale cut its production target for 2021 amid growing demand, which has caused supply shortages as all major iron ore producers operate at near full capacity. Inventories of raw materials are low, while economic stimulus in the US and Europe is likely to create additional demand, analysts at Fitch say.

Risks to the copper market are possible strikes at mines in Peru and Chile, as workers are expected to renew their labor contracts this year. The demand for copper is also supported by energy transition , as the metal is used in electric vehicles, wind turbines and transformers.

Zinc and aluminum valuations have been raised by Fitch, in part due to growing demand in China.

“We have raised our forecasts for gold prices for 2021 and 2022 due to increased investment demand and purchases from central banks. We believe that in the medium term, prices will decline to an equilibrium level of $ 1200 per ounce,” – said in the message.

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