Estudios Económicos


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  • General recovery in the sector, coupled with a strong increase in metal prices
  • Recovery in demand coming from the manufacturing sector
  • Products used in many industries across the world, notably in the manufacture of electrical batteries and aluminium components intended for electric vehicles
  • Future opportunities for some metals, such as nickel, with the development of electric vehicles


  • Increased pressure from Chinese authorities to reorganise the steel and aluminium industries
  • Highly dependent on Chinese economic policy
  • Push to reduce the environmental footprint of mining and metalworking

Risk assessment


The overall economic recovery in 2021, with global GDP estimated to increase by 5.6% by Coface, has important consequences for the metals sector. Demand in the manufacturing sector has rebounded strongly in the richest countries thanks to the mitigation of containment measures, the substantial stimulus plans and the high household savings accumulated in recent months. During the health crisis, the sudden halt in industrial activity and the collapse of global demand had forced steelmakers to shut down their activity. Thus, the sustained demand following the easing of the lockdowns created a mismatch between supply and demand, creating strong pressures on prices.

However, in recent months, prices of several metals have fallen from the record highs reached earlier this year. This suggests that the overall recovery in metals may be faltering. Markets are anticipating a slowdown in Chinese demand, as the authorities want to curb the expansion of the steel sector to meet its greenhouse gas reduction targets. Furthermore, authorities are acting swiftly to reduce speculation around metal prices to help downstream sectors cope with higher input prices.

Finally, although it is very hard to anticipate trends, metal prices, which peaked in 2021, seem to be stabilising now, in line with Chinese demand (50% of world metal demand) that is continuing to grow, but at a slower pace. It should be noted that a new wave of the pandemic, driven by the Delta variant, threatens the global economy and therefore the metals sector.


Sector Economic Insights

Although early in China, the recovery has been widespread thanks to the stimulus plans of the richest countries. Coface estimates GDP growth of 7%, 5.3% and 10.5% in 2021 in China, Europe and the United States, respectively. In 2020, when the COVID-19 pandemic broke out, the metals sector, which is highly dependent on economic conditions, was affected differently across the globe.

According to the Australian Department of Industry, Science, Energy and Resources, global consumption of steel, copper and nickel will grow by 5.8%, 3.7% and 7.3% in 2021, respectively. General consumption continues to rebound in China, Europe and the U.S., thanks to government stimulus measures. An improvement in the trust of economic actors and the massive COVID-19 vaccination campaigns have been underway since late 2020. It is coupled with a gradual economic recovery in most countries, which is likely to boost demand for metal consumption (pre-crisis levels have been surpassed), despite the uncertainties and difficulties that remain.

Mine closures occurred in the largest producing countries. To cope with the virus, the number of workers in mines had been restricted, resulting in a drop in production. The rebound in Chinese demand for the main industrial metals allowed their average price to rise quite rapidly, even though strong pandemic waves were still underway in other parts of the world. The Chinese recovery, followed by a more global recovery, allowed metal prices to rise: by 25% for aluminium (60% of global consumption is from China), 47% for copper and 34% between 2020 and 2021, according to Coface. The net margin rate of the various segments analysed by Coface (steel, copper, nickel, zinc, etc.) increased in the first quarter of 2021. The steel industry worldwide recorded a net margin rate of 7.7% for Q2 2021, compared to 3.7% in Q2 2020.

Although the recovery of the metallurgical activity is widespread, consumption and production of metals are not exactly the same in all parts of the world.

In China, where lockdown measures were eased early on, the recovery in metal consumption was initially driven by central government infrastructure projects and by the recovery in household consumption, particularly in the automotive sector. By March 2021, steel production in China had increased by 14% year-on-year, reaching a monthly production record of 97.9 million tonnes in April.

The increase in metallurgical production to meet demand involves all types of metals. However, rising environmental standards will increase the costs of mining operations, encouraging significant investment in foreign mines, particularly for iron ore and copper. This will be alongside the increase in the production of electric vehicles, which require metals such as nickel, copper or aluminium.

In Europe, demand for metals is driven by higher investment and household consumption. According to the European steel association Eurofer, steel consumption in Europe will increase by 11.7% in 2021, with an exceptional 37.5% increase in Q2 2021. The steel recovery is driven by the construction sector (35% of steel consumption) and the automotive sector (18%), where production should increase by 15.9% in production in 2021, according to Eurofer.

In the United States, the economy has recovered strongly, particularly since the announcement of Joe Biden's recovery plan (amounting to 25% of GDP). According to the ISM (Institute of Supply Management), the manufacturing index reached 64.7 in March 2021 (vs 60.8 in February), highlighting the recovery of the manufacturing sector.
In South America, health measures and a slowdown in mining activities have not allowed the metal industry to rebound as quickly as in the richest countries. For example, in Chile, copper production fell by a further 2% year-on-year in March. In Peru, quarterly production in March was up 3% year-on-year, but still below pre-pandemic levels. In Brazil (the world's 2nd largest iron ore exporter), heavy rains slowed the recovery of iron ore production early in the year, before finally returning to pre-COVID-19 levels.

Trends in the prices of the main metals reflect the trends of the economic and health crisis.

After declining in response to the COVID-19 crisis, prices of major metals are on the rise. According to SteelHome, average steel prices in China, Europe and the U.S. increased by 19.5%, 25.6% and 22.6% respectively between Q1 2021 and Q2 2021. The metal prices in 2021 have returned to their pre-COVID-19 levels and are expected to remain stable this year, due to strong demand in client sectors such as manufacturing. Despite the difficulties encountered, the steel industry has remained overall a profitable business in the main markets.

In the mid-term, the need to reduce the sector's environmental impact and the continued development of electric engines is expected to continue to have a major impact on its business.

The development of wind and solar energy, as well as the democratisation of the electric car, require very large quantities of copper and nickel (amongst others). Such vehicles contain three times more copper than a car with thermal propulsion. For nickel, the differences can vary from between 3 to 30 times, depending on the technologies and technical characteristics of the vehicles. Carmakers, who are looking to reduce the weight of vehicles, will eventually favour aluminium, which is 10 to 40 times lighter than steel, to increase vehicles’ range.

In line with the development of a Green Deal, a programme of investment in green energy promoting energy transition and decarbonisation, the European States are trying to build a consensus to make the continent's economy sustainable, particularly through the exploitation of natural resources. Thus, the demand for metals such as aluminium, nickel, platinum and palladium, related to electric vehicles will grow in the coming years. We anticipate that small and medium-sized companies in the metal sector will face difficulties, as the sectoral transition will require heavy capital expenditure, to lower the environmental footprint.



Last update : August 2021

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