Moody's lowers the 12-month price assumptions for certain metals and mining commodities as global economic slowdown weakens demand

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Research Announcement: 

Moody’s lowers the 12-month price

assumptions for certain metals and mining commodities as global

economic slowdown weakens demand

Sao Paulo, September 01, 2022 —

» Price assumptions for aluminum, copper, gold, silver, steel and metallurgical coal were revised

down, reflecting the weakening demand resulting from the global economic slowdown

» Moody’s also lowered the medium-term price sensitivity range for steel in Asia and raised the 12-

month price assumption and medium-term price sensitivity range for thermal coal

Moody’s Investors Service has lowered its 12-month price assumptions for aluminum, copper, gold,

silver, steel in various regions and metallurgical coal as results of the weakening demand following

the global economic slowdown, says the ratings agency in a new report published today. Moody’s

has also lowered the medium-term price sensitivity range for steel in Asia. At the same time, it has

raised the 12-month price assumption and medium-term price sensitivity range for thermal coal. The

price assumption reflects Moody’s expectations that G-20 economies will decelerate to 2.5% in 2022

and 2.1% in 2023, from 5.9% in 2021.
“China is a major consumer of base metals, coal and iron ore, and the largest steel producer

globally. A slowdown in the country’s economic growth would reduce demand across the metals

and mining sector,” says Moody´s Investors Service Senior Vice President Barbara Mattos. “Prices,

which have been volatile, are decreasing from the peaks of late 2021 and early 2022 but will remain

historically high,” she adds.
Moody’s also points out that supply will stay tight for most base metals during the coming 12 months,

as production has not kept pace with demand during the past couple of years. Supply-chain snarls

have also disrupted production across the metals and mining sector. And inflation will remain high.
For aluminum, although Moody’s lowered its 12-month price assumptions, prices are expected

to remain elevated and above historical averages; copper prices will continue to respond to fears

of economic recession in key developed countries and the slowdown in China’s property market

and assumption for steel prices have been lowered globally as demand weakens. Finally, price

assumptions for nickel and zinc remain unchanged.
The price of gold is facing pressure from the current environment of rising interest rates and a

stronger US dollar, and precious metal price assumptions were lowered. Although gold is seen as an

inflation hedge, higher US interest rates and bond yields raise the opportunity cost of holding bullion,

which yields no interest. Silver pricing is likely to face the same pressures as gold even though about

60% of demand is from industrial users (solar and electrical applications).
Subscribers can access the report at:

http://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1338970

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This publication does not announce a credit rating action. For any credit ratings referenced in this

publication, please see the issuer/deal page on https://ratings.moodys.com for the most updated

credit rating action information and rating history.
Barbara Mattos, CFA

Senior Vice President

Corporate Finance Group

Moody’s America Latina Ltda.

JOURNALISTS: 0 800 891 2518

Client Service: 1 212 553 1653
Marcos Schmidt

Associate Managing Director

Corporate Finance Group

Moody’s America Latina Ltda.

JOURNALISTS: 0 800 891 2518

Client Service: 1 212 553 1653
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