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The updated expectations reflect a decline in global steel production

The international credit rating agency Fitch Ratings revised its forecasts for the prices of metals and raw materials for 2022, reports SteelOrbis. The updated report reflects changes in economic growth expectations as well as supply and demand dynamics.

In particular, the agency lowered its short-term forecasts for iron ore prices for 2022 from $120/t to $115/t. These forecasts reflect a decline in demand for steel, particularly in China, leading to reduced steel production, lower demand for steel resources, lower margins for steelmakers and a build-up of iron ore inventories.

Fitch also lowered its 2022 coking coal price expectations from $400/t to $370/t. At the same time, the supply of coking coal has improved, as production has resumed in Australia, and Russian producers have partially redirected exports from Europe to Asia. At the same time, prices for coking coal reached the lowest level, and some producers directed their products to the thermal coal market, where they benefit from high demand and prices.

Fitch’s medium- and long-term forecasts for the iron ore and coking coal markets remain unchanged. Iron ore prices in 2023 and 2024 are expected at $85/t and $75/t, respectively, and coking coal prices at $200/t and $140/t, respectively.

As GMK Center reported earlier, Fitch Ratings forecasts that global iron ore production will grow during 2022-2026. On average, it will increase by 2.7% over the period, compared to a decrease in 1.3% in 2017-2021