By Steve Fiscor, Editor-in-Chief
For months, this column has speculated on the possible impacts of the coronavirus (COVID-19) on the demand for mined commodities. During March, the disruptive forces aligned and the market began to see the results in reduced metal prices. Also during the month, the Russians broke rank with the Organization of the Petroleum Exporting Countries (OPEC) and oil prices began to decline. Their timing could not have been worse. COVID-19 would further weaken demand for oil. With a glut on the market, prices briefly plummeted below $20 per barrel. This situation caused panic selling by investors. They sold positions in everything, including equities, bonds and precious metals. At a time when gold prices should sky-rocket as a safe haven, they didn’t. Investors moved toward cash positions across the board.
Compared to the other precious metals, gold held its ground. It lost $30 per ounce (oz) during March, settling at $1,610.20/oz as this edition was going to press. Silver fell from $17.19/oz to as low as $12/oz (-30%) before recovering to $14.48/oz (-16%). As far as platinum group metals, platinum and palladium lost 16% and 10%, respectively. Palladium prices dropped from $2,510/oz to $2,255/oz (-10%) and platinum dropped from $863/oz to $726/oz (-16%). Similar to silver, both dropped significantly during mid-March and then regained ground. Palladium prices fell to a low of $1,570/oz (-37%) and platinum fell to a low of $609/oz (-29%).
Of the non-ferrous base metals, aluminum was hit the hardest, dropping 15.1% from $1,706 per metric ton (mt) to $1,448.50/mt, or $0.78/lb to $0.66/lb. Copper declined from 14.9% from $5,668/mt ($2.58/lb) to $4,821.50/mt ($2.19/lb). Tin prices fell 13.1% from $16,750/mt to $14,550/mt. Prices for lead and nickel fell by 11.3% and 10.9%, respectively. At 7.1%, zinc managed to avoid a double-digit percent decline. Iron ore lost $5.41/dmt, falling from $87.14/dmt to $81.73/dmt.
Discussing the $12/oz sliver price, Refinitiv (formerly GFMS), which recently published the Silver Market Review 2019, explained that it got caught up in a broader market sell-off. “We expect prices to recover from current lows, driven by bargain hunting, before moving higher later in the year once the market hysteria calms down and safe haven demand kicks in, taking the silver price to an annual average of $15.75/oz this year, down by 3% year-on-year,” said Cameron Alexander, manager of precious metals research for Refinitiv.
Total physical demand for silver was down by 2% last year to 1.035 billion oz (32,196 mt). Industrial fabrication fell by 4% to an estimated 555 million oz (17,259 mt), as demand was dragged down by a slowdown in the global economy.
On the supply side, mine production declined by less than 1% to an estimated 853.7 million oz (26,552 mt) in 2019.