The outlook for the supply/demand balance in 2020 is looking far better than it has previously, which has given producers a stronger hand in negations with consumers.

Saudi Arabia's decision to boost output and offer deep discounts for its crude after Russia reject the kingdom's request to make deeper cuts has triggered a price war which threatens to saturate the oil market with supplies just as the coronavirus outbreak saps demand.

In February, the Henry Hub natural gas spot price averaged US$1.86 per million British thermal units (MBtu), down 11% on January’s average, as warm weather in the northern hemisphere contributed to below-average inventory withdrawals and put downward pressure on gas prices.

AME is forecasting the average contract price for premium HCC to lower given the uncertain market affected as the coronavirus outbreak rapidly spread across the globe.

The coronavirus outbreak triggered the International Energy Agency (IEA) to revise down its outlook for global refinery runs. Chinese crude throughputs for Q1 2020 have been cut by 1.1Mbpd and are now expected to contract by 0.5Mbpd year-on-year. As a result, global refinery runs are forecast to expand by just 0.7Mbpd in 2020.

The spot price for high ash Australian thermal coal reached eight-month highs in February while China's domestic coal production continues to be affected by the coronavirus outbreak. Meanwhile, sustained low prices of LNG and gas, as well as oversupply in Europe, has led to tepid demand from Atlantic thermal coal markets.

The iron ore spot price averaged US$87/t in February 2020, a decrease of 7.4% month-on-month as the coronavirus pandemic impacted economic activity as well as sentiment. Prices fluctuated through the month, rising to U$91/t on February 24 from US$80/t at the beginning of the month, before dropping back to U$84/t at the end of the month.

Chinese steel producer profit margins reportedly fell over February as the coronavirus outbreak stalled demand, created significant logistic issues and resulted in significant stock build up at mills.

The coronavirus has hit automotive factories in China owned by companies such as Toyota, Honda and General Motors, forcing extended shutdown periods beyond the Lunar New Year festivities and weakening demand for base metals. Major Chinese smelters Jiangxi Copper and Tongling Nonferrous announced production cuts.

In February, nickel prices plunged to an average price of US$12,735 /t (US$5.78/lb) from US$13,549/t (US$6.15/lb) in January. Prices did gain temporarily as the phase one trade deal between the United States and China was realised in February. However, the run was short lived as the coronavirus rapidly spread to countries outside of China causing shipping and travel restrictions which have resulted in supply chain disruption and lower prices.

Zinc prices initially rose in February as the phase one trade deal sparked hope for a revival of industrial activity, before plummeting in line with other base metals as the outbreak of the coronavirus spread to more than 100 countries.

Concerns over the economic impact of the coronavirus outbreak continues to pressure aluminium prices. The European aluminium price averaged US$1,693/t (US76.83¢/lb) for February, a 4.5% decline from the January month average. Over the month the price declined 0.9% to US$1,672/t (75.8¢/lb).

The real February action was condensed into the final two weeks of the month – and what a couple of weeks it was!