ANALYSTS’ VIEW-Coronavirus destroys more metals demand than supply

ANALYSTS’ VIEW-Coronavirus destroys more metals demand than supply

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LONDON, May 13 (Reuters) – Demand losses caused by the COVID-19 pandemic will outweigh the impact of supply disruptions for industrial metals such as aluminium and zinc, leaving these markets with huge surpluses and high stocks.

Fundamentals for copper and nickel are expected to be relatively strong as lockdowns in producer countries limits supply and helps to offset the drop in demand.

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For details of analyst forecasts see

Following are comments on the fundamentals of base metals markets this year:


ANZ analyst Soni Kumari

“Aluminium…prices are trading deep in the cost curve, 90% of the production is loss-making.”

Capital Economics analyst Kieran Clancy

“The huge costs involved in suspending and restarting aluminium smelters have mostly prevented any significant supply cuts. Aluminium stocks are likely to climb and, as was the case after the global financial crisis (GFC), stocks should remain high for several years, a key factor holding back any recovery in prices.”

CRU analyst Lais Santos

“For aluminium producers, the collapse in oil prices has impacted input costs and key producer currencies, lowering smelting costs. In addition to that, alumina prices have dropped 20% since January.

“While demand decreases more than supply, inventories are expected to reach 101 days of consumption by the end of the year from 62 days in 2019.”

Independent analyst Robin Bhar

“Key end-use sectors such as autos and aerospace, building and construction and packaging will see substantial consumption declines. This will not be matched by declines in primary production with smelters reluctant to cut output as costs of production are lower due to falls in power costs and currency depreciation against the dollar.”


ANZ analyst Soni Kumari

“Tightness in the concentrate market is evident in TC/RC (treatment and refining) charges, smelters are using their stockpiles to run their plants. We believe downside risk for demand remains high as industrial activity is likely to be muted this year.”

Capital Economics analyst Kieran Clancy

“Virus containment measures have weighed heavily on copper demand. That said, the growing list of cutbacks at mines in Latin America should eventually start to weigh on refined supply and reduce the size of the surplus as the year progresses.

“We anticipate that the copper price will recover quicker than most other base metal prices over the coming years.”

Refinitiv Metals Research analyst Karen Norton

“We forecast a 3% fall in global copper demand in 2020, based on declines in most major copper-consuming regions, albeit with a gradually improving picture as the year progresses.

“This is however based on the assumption that there is not a marked resurgence in COVID-19. In this regard, the return to work in China is being closely monitored.”

S&P Global Market Intelligence analyst Tom Rutland

“Due to the pandemic impacting demand more severely than supply, we expect London Metal Exchange copper cash prices to fall to average $5,702 a tonne in 2020 down from $6,005/t in 2019.”


ANZ analyst Soni Kumari

“Demand risk is larger than supply. We see zinc demand severely hit in the world ex-China, while China will see a modest decline as infrastructure-led stimulus will limit losses.”

Citi analyst Oliver Nugent

“About 20% of zinc supply is impacted right now, but the amounts you lose overall probably won’t be as large as the amount by which demand contracts.

“Governments around the world, not just in China, will likely try to grow their way out of COVID-19 induced recession with infrastructure projects.”

CRU analysts Helen O’Cleary

“Although we expect significant losses to mine output due to the lockdowns and low prices, the impact on smelter output is likely to be less severe. Refined demand is being hit much harder than supply though and we expect surging refined surpluses to pressure prices.”

S&P Global Market Intelligence analyst Luke Nickels

“China will start to recover during the second quarter of 2020 whereas the rest of the world is expected to take longer to recover to pre-coronavirus consumption levels, particularly Europe and the Americas where the virus is having greater effects than it did in China.”


CRU analyst Neil Hawkes

“While CRU does expect a bigger drop in demand than production, the latter has been notably hit by disruptions to recycling activity as well as to mine production.

“Prices will continue to re-test 2015-2016 lows, but we see no further collapse towards 2008-2009 GFC-related lows.”

Independent analyst Robin Bhar

“Lead acid battery markets are relatively immune to the business cycle as 40% of demand comes from the replacement battery sector, while production cuts have been exacerbated by a large drop in scrap output and collection.”


ANZ analyst Soni Kumari

“Electric vehicle support will be undermined to some extent this year, given the plunge in oil prices.” 

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