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World Commodity Forecasts Industrial Raw Materials Product Image

World Commodity Forecasts Industrial Raw Materials

  • ID: 2101443
  • January 2015
  • Region: Global
  • 119 Pages
  • The Economist Intelligence Unit

The Economist Intelligence Unit still expects prices for Industrial Raw Materials (IRM) to turn around in 2015, rising by 4.5% after falling by over 5% in 2014. Prices will also increase in 2016 but will nevertheless remain well below their highs of 2011. Commodity prices in general should start to reflect market fundamentals more closely in the medium term, owing to the winding-down of the US government's loose monetary policy and the withdrawal of many financial institutions, and investors, from the sector.

Prices for base metals in 2015 will show the strongest gains in our index, owing to a strong recovery in aluminium prices. The light metal has now consolidated at above US$2,000/tonne owing to a tight physical position in markets outside China. Large stockpiles of metal and a reversal of the forward curve into backwardation could threaten the release of large volumes of metal into the market and potentially depress prices. However, relatively strong demand should ensure that prices stay relatively elevated in 2015-16.

Copper prices will be steady in 2015-16, as the market is close to balanced. Demand will slow sharply in 2015, as high base effects from 2014 will READ MORE >

Note: Product cover images may vary from those shown

World Commodity Forecasts Industrial Raw Materials

Economist Intelligence Unit commodity price index
Industrial prices will start a turnaround in 2015
Aluminium and copper will both rise in 2015-16
Agricultural industrial products have a poor price outlook
Oil prices are plunging to multi-year lows

Demand shows surprise bounce-back in Brazil, South Korea and Turkey
European aluminium demand growth is far outpacing GDP
Japanese consumption is expected to slow sharply in the next few months
Indian and Brazilian demand is flying in the face of economic indicators
Klesch plans to restart 100,000 t/y of smelting capacity in the Netherlands
Russian output in 2014 will marginally exceed earlier guidance
Aluminium production outside of China is expected to hold at current levels
The Brazilian election result will not affect aluminium supply
Stocks and prices
Large stockpiles are building in China
LME prices meet resistance at US$2,100/tonne
Backwardation runs on, but stock withdrawal rate remains little changed
Price rises in 2015-16 will be limited by a heavy stock position

China has announced a public cap on CO2 emissions for the first time.
US coal consumption will start to decline again from 2015
Coal use will fall in the EU in 2014-16
The EU has adopted binding emissions targets to 2030
India's coal consumption will remain robust
Japan is committed to keeping coal in its energy mix
Demand is beginning to soften in China at start of a long-term trend
US exports will struggle to compete with cheaper coal from Colombia
The Indian government is seeking to increase competition in the coal sector
Falling prices likely to depress investment in Australia's coal industry
Indonesia is making new attempts to control exports and production
The weak rouble and conflict in Ukraine has pushed up Russian output
Colombia's output growth will moderate in 2015-16
Stocks and prices
Coal prices fall to new multi-year lows in October

China apparent consumption has been running at a strong pace in 2014
State Reserve Bureau will remain an active buyer of copper
China's production of copper semis recorded strong growth in 2014
Japan copper consumption is outperforming the rest of the economy
Asian copper excluding China up by 5.4% year on year so far in 2014
European copper demand growth estimate for 2014 is raised to 6.2%
US copper demand indicators remain subdued
Expansions continue to fuel mine production growth in Latin America
Disruptions mean that new mines are not reaching capacity on schedule
Freeport and Newmont are granted export licences and resume exports
Disruptions at smelters are also occurring
Re-tightening of the concentrate market is expected from 2017
China's refined copper output accelerates to record in October
Chinese scrap imports improve, but remain down 10% on 2013 levels
Stocks and prices
Estimate for China's SRB buying more than double, dip-buying to continue
LME stocks on cancelled warrant status remain down on year-earlier levels
New concerns about China's physical demand are weighing on prices

China will dramatically slash import levels
Government will support investment in India's textile sector
Pakistan's textile sector is squeezed by higher raw cotton prices
Consumption in Bangladesh will grow, regardless of poor safety standards
Dependency on slow-growing EU will weigh on consumption growth in Turkey
Poor weather conditions are threatening China's cotton harvest
India is poised for large increase in planted area
US to record bumper crop in 2014/15
A large output is expected in Pakistan, supported by government subsidies
Production will slide in Brazil as weak prices affect planting decisions
Dry weather in Australia's planting season prompts a downgrade
Stocks and prices
Large harvests and stocks will put downward pressure on prices

Crude oil
US consumption will grow but will not reach pre-recession levels
Poor prospects for Europe's oil consumption
Demand from Japan will decline as the economy struggles
A property market correction in China will affect demand for fuel products
Several governments are removing subsidies while prices are weak
Prospects for Russian consumption growth are grim
OPEC holds firm on its production target
Saudi Arabia will carry on with new projects, despite price slides
Iraq agrees to lower production plateaus
Further nuclear discussions mean no short-term cuts to Iranian production
Libya's output is fluctuating
US production shows no signs of stopping in the face of price slides
Low oil prices will hit Canadian oil sands, but not enough to derail growth
New sanctions will challenge Russia's unconventional oil plans
Stocks and prices
Price forecast cut again as market remains weak

China's consumption will return to trend growth in 2015-16
Changes to import policy will support India's demand growth
Funds have already moved out of gold, so ETF exodus is now less likely
Uncertainty about prices will weaken retail investment demand
The switch to alternatives to industrial gold is accelerating
Depressed prices will hit producers that face higher costs
After a strong 2014, production in Russia and Australia will fall back
Canada will see rising output in 2015-16
Chinese production will also continue to add to global supply
Scrap sales will stabilise along with prices in 2015-16
Central banks will continue to buy gold to diversify their reserve holdings
Producer hedging will not be a significant source of supply in 2015-16
Stocks and prices
Prices are set to remain subdued in 2015, given the macro environment

China's domestic market remains in slight deficit in January-September
Chinese passenger vehicle production growth remains strong
Demand will benefit from robust battery production growth
Japanese lead demand will increase in 2015-16
EU car sales record 14th consecutive monthly year-on-year rise in October
US vehicle sales increase by 5.5% year on year in the first ten months of 2014
China's lead concentrate imports are rising strongly
Total smelting capacity is expected to have risen strongly in 2014
Nyrstar announces upgrade package for Port Pirie smelter in Australia
Exide's Vernon facility faces further legal threat
Global mine production (ex China) saw little growth in 2014
The rate of mine expansions is slowing
Stocks and prices
Prices will rise in 2015-16 as the deficit widens

Liquefied natural gas
Japan's imports likely to decline in 2015-16 but to remain at elevated levels
Mild temperatures have reduced South Korean demand
China will continue absorb a greater proportion of LNG imports
Indian imports could get a boost from lower prices
New markets are emerging in South-east Asia
Despite weak gas demand, Europe will add new terminals in 2015-16
Qatar's production will be steady in 2015-16
Australian production is to expand rapidly from 2015
Malaysia's share of LNG market to shrink as it starts to import fuels
US will enter the market in a big way from 2016, changing its fundamentals
Algeria may be biting off more than it can chew with new export plans
A difficult operating environment makes Nigerian expansion unlikely
Success of PNGLNG is spurring interest in other projects in Papua New Guinea

Natural gas
US demand will pick up as coal shutdowns expand
Russian consumption will be affected by a poor domestic economic performance
Agreement with Russia will ensure six months of supply for Ukraine
Environmental considerations will help European gas demand recover
China is continuing to develop its import supply routes
New Indian government raises gas prices
Switch back to some nuclear capacity will come at expense of Japan's gas use
Steady growth expected in consumption in key Middle East economies
US output will rise in 2015-16 to meet growing demand from LNG exporters
Russian production will increase despite new sanctions
Shale exploration in Europe has so far been disappointing
Saudi Arabia is planning new capacity in natural gas
China is scaling back its shale ambitions
Stocks and prices
Healthy supplies will push down US prices in 2015

Natural rubber
Demand in China in 2015-16 will fail to match the strong growth of 2013-14
Indian consumption will accelerate in 2015 and remain healthy in 2016
Japanese consumption revised down following descent into recession
Spanish and Polish demand is pulling up the EU aggregate
North American consumption growth will return in 2014, despite bad start
The Thai government is poised to sell more of its stockpile
Indonesian production will be stronger than expected in 2015-16
Malaysian production is struggling
Government steps in to support India's rubber farmers
Vietnamese production will remain tied to Chinese consumption
Stocks and prices
Prices will remain weak in 2015-16 as stocks hang over the market

China's dominance of the nickel market will diminish owing to ore shortages
China's consumption will show signs of recovery in 2015-16
Like most major commodities, EU consumption of nickel will be slow
US consumption will grow in 2015-16 but will not match strong 2014 levels
Japanese demand is affected by higher tax rates
Smaller markets growing at a rapid pace help to bring up the overall market
Falling production from Asia drags down global aggregate
New Caledonia sees mixed results from major new mines
Philippines should benefit from Indonesia's export ban
Indonesia's ore export ban will continue to disrupt the market
Both Canada and Australia will see rising refined output in 2015
Russian output is unlikely to be affected by sanctions in the near term
Stocks and prices
A market deficit will help to boost prices in 2015-16

China's consumption will be at a much slower pace than historical levels
Strong US auto sales will help robust North American steel use
Performance in Europe will be weak as economic conditions remain fragile
Growth in "Other Asia" is likely to be anaemic
CIS consumption is increasingly subject to political risks
Lower energy prices should have little short-term impact on Gulf steel demand
China's steel production will drop to single-digit growth rates
Domestic outages have opened the door to strong imports in the US
Both the US and Canada are targeting steel dumping
EU output has been outpacing the rest of the economy
CIS steel output will recover slowly in 2015-16 after a tough 2014
Japan's exports will face competition from cheaper origins
Better business confidence in India has failed to translate into higher output
New capacity is driving strong production growth in the Middle East
Iron ore prices will stay in a low band in 2015-16
Coking coal production cutbacks will affect the market in 2015
Scrap prices have finally adjusted to lower iron ore and coal prices
Stocks and prices
Asia will continue to have the world's cheapest steel prices

Semiconductor shipments at record highs but the rate of growth is slowing
Tin use in chemicals to overtake tinplate as second-largest market
On balance, demand trends should be supportive for tin
China will continue to shape outcomes in the global tin market
In Japan, prospects for higher tin consumption appear limited
Prospects for higher consumption in Europe are limited
China's tin mine output is probably running at full capacity
Myanmar has emerged as an important source of tin to China
Output from Indonesia's largest producer is expected to be limited
Indonesia has introduced a number of controls over exports
Lower Indonesian tin exports have not caused shortage in world market
Brazil and Bolivia are adding to tin mining capacity
New tin mines are being brought online in Australia and Africa
Stocks and prices
Tin prices will struggle in 2014-15 before a deficit-led rebound in 2016

Consumption growth in China ran at a brisk double-digit pace in 2014
The poor overall performance in the EU will hit zinc demand
US zinc consumption growth forecast is raised
Japan's zinc demand will continue to grow slowly
Chinese refined zinc production is increasing by 12.4%
EU refined zinc production posts 3.7% growth in January-September
Expansions bolster Asian output
We expect net mine capacity to have risen in 2014
Stocks and prices
China becomes net exporter of refined zinc as finance activity is curtailed
SHFE stocks continue to decline, down by 54% in November 2014
LME zinc cash price to average US$2,172/tonne in 2014

Statistical appendix

Note: Product cover images may vary from those shown
Note: Product cover images may vary from those shown


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