Fitch expects iron ore prices to fall in the second half of 2020 as a result of increasing output in Brazil and Australia later in the year, as well as slower economic growth. Its iron ore price assumptions, however, remain unchanged at $75/tonne cfr China for 62% Fe in 2020 and at $60/t in 2021.

This comes as prices are resilient so far, with supply disruptions in Brazil and Australia during 2019 lowering inventory levels and Chinese steel production remaining relatively high despite the coronavirus. Over the longer term, iron ore is expected to decline to $55/t, which will squeeze out high-cost producers.

Premium hard coking coal price assumptions also remain unchanged at $140/t fob Australia in 2020 and at $140/t in 2021. Year-to-date prices are supported by supply disruptions in Australia and China, as well as by the Mongolian coal export ban to China.

“This is likely to be offset later in 2020 by high steel inventories and the weaker economy,” Fitch says in a note sent to Kallanish. “Global demand will remain relatively flat in the medium term, while supply growth will come from recently commissioned mines and brownfield expansion, mostly in Australia and Russia.”

Nickel price assumptions for 2020 have been cut to $12,500/t from $14,000/t on lower demand growth and increased nickel inventories. The assumption for 2021 has been cut to $13,500/t from $14,000/t.

“The unchanged medium-to-long-term [nickel] prices reflect a potential tightness in supply as Indonesian ore exports, now banned by the government, may not be fully replaced by other nickel suppliers, while we expect stronger long-term demand, particularly due to nickel use in batteries for electric vehicles,” Fitch says.