Covid-19 briefing

6%

After downturn for several months, positive GDP growth is forecast in all countries; 2021 consensus forecast

for GDP growth is currently 6.0%.

$786bn

The UK’s Covid-19 stimulus package is valued at $786.1bn, 29.8% of the country’s GDP, with a further $90bn committed in funding in the 2021 Budget.

COAL

ICE Coal Futures prices rose steeply again in August, up by 15.1% for the month and were US$174.25/t by month end. Prices have been helped by rising demand from China and other parts of North Asia, as well as supply constraints. China's aversion to buying coal from Australia is also leading to high price increases for lower quality coal from markets such as Indonesia.

PRECIOUS METALS

After passing $1,900/oz in late May, the gold price declined in mid-June before steadying at around US$1,800/t in July and August. An improving economic outlook and strengthening US dollar had dampened prospects for a rise in the gold price, although they are being supported by continued low interest rates in 2021.

BASE METALS

With rising inventories, the average copper price in August was 1% down on the July average although the price improved towards the end of the month, finishing at $9,463/t. Concerns over supplies from Chile, where strikes are threatened at several major mines, plus potentially higher mining taxes in Peru may keep prices high over the remainder of 2021.

IRON ORE

The iron ore price dropped steeply in August, ending on US$159/5, having previously been over US$200/t in July. The fall was due to the Chinese government moving to restrict steel output. China is aiming to reduce its carbon footprint, with reduced steel output in 2021 to support this. Steel production in China fell by 9.4% in July.

PALLADIUM & PLATINUM

After reaching a six-year high of $1,325/troy oz in February, the price of platinum has been falling, dropping to US$979/troy oz in late August, and ending the month on US$1,020/troy oz. However, in 2021, prices are expected to be supported by improved demand from the auto and industrial sectors, albeit balanced by significant growth in supply after the 2020 challenges.