New year, new start - even though the virus is still very much with us and continues to wreak havoc around the world. While the World Health Organization is warning that new strands of COVID-19 might make 2021 a tough year too, vaccinations are now in full swing; the Sputnik V vaccines were released in Russia in early December and, at the time of writing, 1.5 million doses have been delivered. Poland, Slovakia and Czechia will be using the Pfizer vaccine like most of Europe, with medical staff, police and the army currently receiving it. Discussions are continuing about the percentage of the population that will need to be vaccinated in order to halt the spread of the virus and whether the recently-emerging new strands will be immune to the vaccine.
On the metals markets, copper is in oversupply in Russia and prices are dropping well below the world average. Demand is being dampened by the colder winter months, holidays and the suspension of many infrastructure/real estate projects. Also, higher LME levels and year-end inventory clear-outs prior to the long New Year and Christmas holidays released large volumes of stock into the market in late December. It is now a lot harder to get invoices paid than to find homes for the metal.
It is a similar situation in Ukraine where there is low demand from cable producers, and in Poland where demand is lagging well behind supply.
The aluminium market is booming. Good demand for AK5M2 ingots from Japan is keeping Russian smelters busy. In Ukraine, Poland and Czechia, prices for Tense have been rising steadily over the past few weeks in the wake of increasing 226 ingot prices.
The brass market is mostly in balance. In Russia, domestic supply is strong enough to cover demand. Market players in Poland, meanwhile, are reporting good demand for Honey from India, while most scrap generators are cautious about shipping to China under its new regulations.
The economic outlook for most countries is positive for 2021. The strong rouble (which is defying predictions of a decline) and an oil price above US$ 50 per barrel are providing the necessary support for the recovery measures in Russia. A recent economic forecast for Poland projects GDP growth of 3.3% in 2021. However, we should keep in mind that the recovery will merely restore output to pre-pandemic levels. A likely increase in the unemployment rate - which in Poland, for example, is expected to rise from 3.3% in 2019 to 5.3% in 2021 - is an important indicator as many businesses which survived 2020 might not be able to outlast a longer crisis.
TRM Group (BLR), Board Member of the BIR Non-Ferrous Metals Division