International rating agency Fitch Ratings has raised its near-term cost estimates for iron ore, nickel, zinc and coking coal, which it uses in forecasting the operating and financial performance of companies in the industry.

This reflects stronger post-pandemic demand and supply disruptions, especially from Russia.

“We expect low stockpiles, rising demand amid economic stimulus and easing lockdowns in China to support copper prices in the second half of 2022,” the agency said in a statement. – Global supplies are constrained by escalating social tensions in Peru and water supply problems in Chile. Nevertheless, we expect global production growth in late 2022 to offset supply disruptions.”

Analysts still expect prices to decline in 2023 as supply from new mines increases. Thereafter, the market will remain largely balanced. The energy transition will also drive copper demand, while supply growth will moderate in the medium term.

The increase in the current year forecast for yellow ore reflects its high average cost since the beginning of the year, around $140 per tonne. However, it is expected to fall towards the end of the year.

Supply issues (due to the conflict between Ukraine and Russia and seasonally reduced shipments from Brazil and Australia) have supported prices despite lower steel production in China, also due to weaker demand.

“Some upside potential for prices could emerge if steel consumption revives early in the second half of the year,” the report said. – Supplies of cheap iron ore should lead the market to move to surplus in two to three years.”

Analysts raised their 2022-2023 coking coal price estimates to reflect this year’s record prices due to supply disruptions from Australia and Russia. However, prices moderated in the second quarter amid a partial resumption of exports.

“Russian sea shipments will remain below pre-war levels, with CRU estimating a decline of 20 million tons in 2022 and a further 6 million tons in 2023, before expecting some recovery,” Fitch said in the report. – We forecast that global long-term demand will decline due to lower consumption in China, which will offset growth in other regions.”