China appears to be struggling to contain the rapid spread of the omicron variant, which may cause significant disruption to logistics, mine production and manufacturing in the first two months of 2022, analysts from SPAngel said.
The research and consultancy firm said in a Dec. 31 note that disruptions in January and February may lead to a spike in metal prices in the first quarter due to potential supply shortages.
But there is a silver lining: Businesses in China are closing shop to curb emissions ahead of the Winter Olympics and Paralympic Games, and "now may be the best time to allow the virus to spread," the analysts said. However, it is still unclear if the Sinovac vaccine is as effective as the AstraZeneca vaccine in reducing serious COVID-19 illness.
Price Ring
NYMEX 62% iron ore prices ended the year at $112.50 per tonne, in line with $112.54/t the week prior, according to S&P Global Market Intelligence data, while London Metal Exchange aluminum prices slipped 1.2% to $2,806/t.
Nickel prices jumped 3.7% on a weekly basis to hit $20,880.50/t as of Dec. 31, as copper prices rose 1.5% to $9,740.63/t on the LME.
Zinc prices inched up 1.0% to $3,590.00/t, while lead prices improved 1.3% to $2,337.75/t, during the week ended Dec. 31.
LME spot gold prices closed 0.8% up to hit $1,822.39 per ounce, and silver spot prices increased 1.9% to $23.09/oz.
Platinum prices dipped 0.9% to close at $962/oz for the week, but palladium prices closed 2.0% higher at $1,928/oz.
Talking points
Platinum prices are projected to increase 16% to $947/oz, while palladium is expected to fall 27% to $1,350/oz due to a diminished supply deficit, which previously propped up prices, Sharps Pixley said in a Dec. 31 note. Price parity between the two metals is expected in the next two years as platinum is increasingly substituted for pricier palladium in catalytic converters, according to the note.
The London-based bullion broker forecast gold and silver prices to improve 10% by the end of 2022, with gold possibly hitting $2,000/oz due to its better performance in a negative interest rate environment, and silver closing the year at $25.50/oz.
In contrast, JPMorgan expects gold prices to steadily decline from an average of $1,765/oz in the first quarter down to $1,520/oz as the U.S. Federal Reserve seeks to end its monthly bond purchases by March and raise interest rates, with the first hike to take place in May.
Financings
ArcelorMittal repurchased 34,080,049 shares worth €885.7 million by market close Dec. 28, as part of its previously announced fifth share buyback program.