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Moody's: Metals and mining outlook upgraded from "negative" to "stable"

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(Kitco News) Moody's Investors Service upgraded its Metals & Mining outlook from "negative" to "stable" for the next 12 months, citing China's reopening and improved conditions in the U.S. and Europe.

According to the report, the new conditions support demand for base metals, steel, and coal.

"We are changing the sector outlook to stable from negative because credit fundamentals will not deteriorate over our outlook period, but will remain volatile, and in certain cases will improve," Moody's Investors Service senior vice president Barbara Mattos said in a news release. "Metal commodity prices will remain volatile and historically high during the outlook period responding to economic growth and activity indicators in China and major economies."

Base metals will see improved demand, and prices will remain supported due to tight supply. The report highlighted aluminum, copper, nickel, and zinc.

"Aluminum prices will persist above the historical average through early 2024, based on, among other factors, its expanding role in clean-energy; copper's historically low inventories and ongoing industry supply disruptions will support its price; nickel will be in surplus in 2023, but incremental growth in demand from electric vehicle market will create supply deficits, while zinc prices will be supported by tight supply, low inventories and higher energy costs displacing high-cost producers," Moody's said.

Iron ore prices are expected to decline into mid-2024 as supply rises quicker than demand. Steelmakers are projected to show substantial gains.

"An expansion in India's steel production and improving economic conditions in China will support met coal prices in 2023, offsetting some risk to demand elsewhere, according to the report. Thermal coal prices will exceed historical averages through early 2024, but the record prices of 2022 were unsustainable," the report noted.

Precious metals will see strong demand while also facing rising production costs. Platinum group metals are estimated to keep steady, the report added.

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