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John Wang
in
Stocks
April 1 22:22

Oil crisis saves money for the miners and drives the sector to oversupply

  Metal prices might fall in the future.
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The decline of oil prices leads to lower energy prices for the mining industry. However, since the demand for metals is falling as well, the industry is still under pressure.

According to the statement of the Dutch ABN AMRO Bank, the sector is in a contradictory position. Lower costs of production usually drive the companies to produce more. At the same time, the pandemic is hitting the primary buyers of metal - carmakers, tech companies etc. The demand is steadily declining.
The situation might lead to oversupply and the reduction of metal prices. When the oil prices go back up again, the mining companies will suffer losses. 
According to the bank’s forecast, by the of 2021 oil prices will be at around US$50 per barrel.