A Look at Covid-19 Effects on Industrial Metals On
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Posted On: 07/08/2021 6:01:34 PM
A Look at Covid-19 Effects on Industrial Metals One Year Later
At the onset of the coronavirus pandemic in March 2020, metal prices declined significantly, prompted by a collapse in the demand for metals. Capital spending cuts in the mining sector and mine closures imposed to control the virus’ spread also disrupted both the long-and short-term supply of metals.
Today the metals market is at an entirely different level with iron ore and copper prices hitting new highs. Cobalt and nickel metal prices reached two- and seven-year highs in February and March of this year. Government stimulus has aided in the growth in demand for metals and facilitated metal price recoveries. Analysts expect industrial metals, particularly cobalt, lithium, zinc, iron ore and copper, to peak in this quarter.
S&P recently compared the potential effects of the coronavirus with the effects of the SARS epidemic, which occurred in 2003. The analytics firm concluded that the global nature of the coronavirus, coupled with the government policy responses and the scale of economic fallout was less akin to the SARS epidemic and had impacts that were similar to the 2008/2009 Global Financial Crisis.
In comparison with GFC recovery, the prices of metals recovered quickly from the coronavirus’ initial effects. The firm notes that the rapid recovery under the pandemic was mainly because of stimulus measures put in place by the government and the disruptions to the demand and supply of metals. It adds that weaker prices of industrial metals prior to the pandemic at the start of last year also made it easier for prices to recover.
Lockdown measures implemented by governments to slow virus spread also impacted the supply of industrial metals, as governments restricted worker activity and movement at mines, smelting facilities and refineries.
While cobalt, lithium, nickel and iron ore mines weren’t as impacted by the restrictions and stoppages imposed across the globe, copper and zinc were hugely affected with Peru, which is one of the main suppliers of the metals, implementing government-enforced closures on mines. These mine closures seem to have had a significant impact on the long-term supply of industrial metals, as the development of various projects that would have helped meet demand today as well as in the long term were delayed.
The analytics firm’s research also found that the coronavirus decreased the international exploration budget by 10% last year. In addition to this, the firm forecasts that the energy transition will strengthen nickel, cobalt and copper prices as well as their demand, noting that commodity prices of all metals, excluding lithium, will be higher by the year 2025 in comparison with their pre-coronavirus levels.
This favorable outlook is likely to be an encouragement to extraction firms such as First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) to press ahead with their exploration, development and extraction activities.
NOTE TO INVESTORS: The latest news and updates relating to First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) are available in the company’s newsroom at https://ibn.fm/FEMFF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
At the onset of the coronavirus pandemic in March 2020, metal prices declined significantly, prompted by a collapse in the demand for metals. Capital spending cuts in the mining sector and mine closures imposed to control the virus’ spread also disrupted both the long-and short-term supply of metals.
Today the metals market is at an entirely different level with iron ore and copper prices hitting new highs. Cobalt and nickel metal prices reached two- and seven-year highs in February and March of this year. Government stimulus has aided in the growth in demand for metals and facilitated metal price recoveries. Analysts expect industrial metals, particularly cobalt, lithium, zinc, iron ore and copper, to peak in this quarter.
S&P recently compared the potential effects of the coronavirus with the effects of the SARS epidemic, which occurred in 2003. The analytics firm concluded that the global nature of the coronavirus, coupled with the government policy responses and the scale of economic fallout was less akin to the SARS epidemic and had impacts that were similar to the 2008/2009 Global Financial Crisis.
In comparison with GFC recovery, the prices of metals recovered quickly from the coronavirus’ initial effects. The firm notes that the rapid recovery under the pandemic was mainly because of stimulus measures put in place by the government and the disruptions to the demand and supply of metals. It adds that weaker prices of industrial metals prior to the pandemic at the start of last year also made it easier for prices to recover.
Lockdown measures implemented by governments to slow virus spread also impacted the supply of industrial metals, as governments restricted worker activity and movement at mines, smelting facilities and refineries.
While cobalt, lithium, nickel and iron ore mines weren’t as impacted by the restrictions and stoppages imposed across the globe, copper and zinc were hugely affected with Peru, which is one of the main suppliers of the metals, implementing government-enforced closures on mines. These mine closures seem to have had a significant impact on the long-term supply of industrial metals, as the development of various projects that would have helped meet demand today as well as in the long term were delayed.
The analytics firm’s research also found that the coronavirus decreased the international exploration budget by 10% last year. In addition to this, the firm forecasts that the energy transition will strengthen nickel, cobalt and copper prices as well as their demand, noting that commodity prices of all metals, excluding lithium, will be higher by the year 2025 in comparison with their pre-coronavirus levels.
This favorable outlook is likely to be an encouragement to extraction firms such as First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) to press ahead with their exploration, development and extraction activities.
NOTE TO INVESTORS: The latest news and updates relating to First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) are available in the company’s newsroom at https://ibn.fm/FEMFF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
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