Fitch Ratings said Monday it lowered its 2020 price estimates for precious metals due to the rapid spread of the novel coronavirus (Covid-19) which lowers global demand.
"Considerably lower economic activity -- due to unprecedented lockdowns in much of Europe, the U.S. and elsewhere -- is significantly reducing commodity consumption," Fitch said in a statement.
The global rating agency said it now expects global gross domestic products (GDP) to contract by 1.9% in 2020, compared to last year, which will translate into a decline in global copper demand of 6% year-over-year.
It stressed that the rapid spread of the coronavirus weakens the short-term global economic outlook and commodity demand.
"The aluminium market will also be oversupplied due to weaker automotive production and construction and the growth of low-cost Chinese primary aluminium capacity," the statement said.
"Low energy costs and the devaluation of local currencies will enable aluminium producers to compete more aggressively, putting pressure on short-term prices," it added.
Fitch now expects aluminium spot prices to average $1,560 per tonne, down from the previous expectation of $1,680 per tonne this year.
In 2020, zinc spot price is estimated to average $1,900 a tonne, down from $2,000 a tonne, while copper spot price is anticipated to average $5,300 per tonne, down from $5,700 per tonne.
Nickel spot price assumption was also lowered to $11,500 a tonne for this year, revised down from $12,500 a tonne.
For gold, the average price estimate for 2020 remained unchanged at $1,400 per ounce.
By Ovunc Kutlu