- ECONOMIC IMPACT -

Latest update: 18 November

While current consensus forecast for global GDP remains negative, many countries are seeing their own GDP level off after weeks of decline.

Polls show that employment prospects have consistently improved since July, with most employees favouring working remotely full-time.

5%

The Japanese economy grew by 5% (QoQ) in Q3 2020 with improvement in domestic demand and exports.

2.7%

The Malaysian economy contracted at a slower pace of 2.7% (YoY) in Q3 2020, as compared to 17.1% contraction in the previous quarter

Impact of Covid-19 on equity indices

- SECTOR IMPACT: MINING -

Latest update: 2 December 

demand side impact

-3.1%

The current forecast for global construction output growth is a decline of 3.1%, versus initial expectations of growth of 3.1% for 2020. Excluding China, the decline would be 5.3%.

-3%

The slowdown in construction is forecast to result in copper and iron ore demand to fall by 3% in 2020. Whilst lower automotive manufacturing will also impact demand for steel, aluminium, platinum, and palladium. Platinum demand is forecast to decline by 7% in 2020, with light vehicle sales estimated to have fallen by 31.3% in Q2.

operational impacts

Mining companies are undertaking a range of measures to minimise the potential for infections and the impact of Covid-19 on mining operations. However, despite efforts to minimise the spread of the virus, cases are still being identified.


For example, Orocobre temporarily suspended operations at its Olaroz lithium mine in Argentina in late October, following 35 employees testing positive for Covid-19.


Meanwhile, as at 23 November, the Minerals Council of South Africa reported a total of 18,885 cases, of which 218 remained active, with 197 deaths across the mining sector. Over 62,670 tests had been taken at mines across South Africa as at 23 November, equal to 13.3% of workers.

Key commodity developments

ICE thermal coal futures dropped by 11.2% from $76.26/t on 1 January to $67.72/t on 31 January, due to fears of lockdown in industrial hubs. The price recovered to $74.36/t, after action to contain the virus and revive industrial activity in China, but the price then slipped to $58/t in late August before recovering to $68.46/t on 26 November, the highest point since 31 March.


The gold price has benefitted from its status as a safe haven, with concerns of a second wave leading to prices reaching an all time high of $2,064/troy oz on 6 August. Since then they have dropped back, falling steeply in November after announcements of successful progress with a Covid-19 vaccine. The gold price closed on $1,788.13/oz on 27 November.


Base metal prices were hardest hit by the reduced demand from the industrial, transportation, and construction sectors. Zinc prices dropped by 28% from $2,466/t on 22 January to $1,773/t on 25 March, aluminium prices fell 21% from 22 January to 9 April to $1,428/t, and copper prices fell by 27% from $6,300/t on 16 January to $4617/t on 23 March. However, prices of all three stabilised and all were above their pre-Covid-19 levels by the end of November.


The spread of Covid-19 across China and weak end-user demand for finished steel negatively impacted iron ore, with iron ore fines 62% Fe CFR Futures on the CME exchange falling by 15.8% from $94.81/t on 17 January to $78.33/t on 3 February. However, concerns over supplies from Brazil and resumption of steel making capacities across China have pushed prices higher. Prices rose to $128.38/t on 3 September, and were $124.5/t on 27 November.

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