[ferro-alloys.com]It’s usually difficult to find a seat at the commodities session on the opening day of the Prospectors and Developers Association of Canada (PDAC) convention held in early March in Toronto, but there was a noticeably smaller crowd at this year’s Sunday afternoon talks.

At the start of his talk on the outlook for metals and mining in 2020, Paul Robinson, a director at CRU Group, noted the unusually sparse attendance – and the reason why.

“We can’t not talk about Covid-19 – coronavirus,” Robinson said.

“At the moment, there is no real change in global demand… Some travel is hit – you can see how empty this room is compared to normal, but we haven’t got any sort of level of significant hit like we’ve seen in China and South Korea.”

CRU Group is a London, U.K.-based company that specializes in commodities research, and Robinson shared some of CRU’s insights into the current and coming drivers of change and uncertainty in the mining and metals sector – including Covid-19.

As an example of the virus’s effects in China, Robinson noted that CRU employees in Beijing have been working from home for the last three and a half weeks – self-isolating, ordering food in, and also not buying consumer goods or booking holidays.

Empty streets in the normally bustling capital of China show that they’re not the only ones.

“The longer this continues, the bigger the impact on the Chinese economy – and it’s starting to have an impact on the global economy,” Robinson said.

Important factors that will determine how big the impact will be include: how the virus is contained over next three to four weeks, how consumers react, and the type of stimulus the Chinese government applies to counter the negative economic effects of the virus.

“A lot about the second half of 2020 depends on the stimulus – there will definitely be a stimulus in China, that is guaranteed.”

If the government stimulus is aimed at encouraging consumer spending and subsidizing the green economy, copper, cobalt and nickel would see a boost, and things could start to pick up in the second half of the year.

If that doesn’t work, and the government reverts to “old school” infrastructure -type stimulus, it would be good for iron ore, steel and copper, but the impact would be “far less sustainable,” Robinson says.

CRU’s current forecast for a basket of 38 commodities sees a 5% price decline for 2020 overall. Palladium is expected to do the best this year, with prices increasing at least 15% over 2019, and lithium is expected to perform the worst, with prices falling at least 15%.

There is downside risk to the forecasts as they assume that the coronavirus effects will largely be contained to China and that the country will apply effective economic stimulus.

In December 2019, CRU’s view was that the commodity price cycle was at a bottom; however, there’s now less certainty about metals demand, Robinson said.

（Mining.com）

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