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World Commodity Forecasts Industrial Raw Materials Product Image

World Commodity Forecasts Industrial Raw Materials

  • ID: 2101443
  • December 2014
  • Region: Global
  • 130 Pages
  • The Economist Intelligence Unit

The Economist Intelligence Unit still expects prices for Industrial Raw Materials (IRM) to turn around in 2015, rising by more than 5% after falling by a similar amount 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 recovery in aluminium prices. The light metal was one of the worst affected by the 2008-09 recession, falling by over 35% in 2009. Since then, prices have struggled to consolidate as enormous stockpiles have weighed against the market. In 2000-09 stocks averaged 38 days of consumption, but since 2009 stocks have averaged closer to 60 days. Although the market appears oversupplied, there are some barriers to accessing metal and substantial queues have built in the London Metal Exchange's warehousing system. Nevertheless, aluminium consumption tends to outpace economic recoveries READ MORE >

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World Commodity Forecasts Industrial Raw Materials

Economist Intelligence Unit commodity price index
Industrial prices will start a turnaround in 2015
An aluminium rebound will help the metals complex in 2015-16
Agricultural industrial products have a poor price outlook
Oil prices cut as demand is unable to accommodate surging output

Demand growth in the US and Japan eases in the second half of 2014
European aluminium demand growth is far outpacing GDP
Japanese consumption is still gaining momentum, despite slower GDP growth
Indian and Brazilian demand is flying in the face of economic indicators
Aluminium production outside China is expected to hold at current levels
The Brazilian election result will not affect aluminium supply
Restarts in China are gathering pace
GCC output increase will be limited to capacity creep for foreseeable future
Stocks and prices
Prices rally again, despite difficult economic conditions
Backwardation in nearby dates re-emerges
The time is still not right for widespread capacity reactivation
Price rises in 2015-16 will be limited by a heavy stock position

China's consumption is now expected to decline in 2014
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
Asia will remain the driver of global coal consumption
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
India has moved quickly to announce new auctions for coal blocks
Falling prices likely to depress investment in Australia's coal industry
Indonesia is making new attempts to control exports and production
Sanctions will hamper efforts to overhaul Russia's coal industry
South Africa's output will grow only slightly in 2014
Colombia's output will resume growth in 2014-16
Stocks and prices
Coal prices fall to new multi-year lows in September

China apparent consumption remained at a strong double-digit pace in 2014
SRB is believed to have a remit to acquire up to 400,000 tonnes this year
Production of semi-fabricated products records strong growth
We are again raising our Japanese copper consumption estimate for 2014
Copper demand growth looks strong across Asia this year
European copper demand growth estimate for 2014 raised further
indicators suggest US copper demand remains sluggish
Peru leads the surge amid strong Latin America growth
The Zambian government's production targets are also ambitious
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
Growth in China's refined copper remains apace
Chinese scrap imports improve, but remain down year on year
Stocks and prices
China's SRB may not be finished with its copper-buying spree for this year
The proportion of LME stock on cancelled warrant status increases
Prices will average US$6,800/tonne in the final quarter of 2014

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
Support from a weak lira will wear off in Turkey
Poor weather conditions are threatening China's cotton harvest
India is poised for enormous gain in yields
US to record bumper crop in 2014/15
A large output is expected in Pakistan, but weather could affect quality
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 will put downward pressure on prices in late 2014

Crude oil
US consumption will grow but will not reach pre-recession levels
Poor prospects for Europe's oil consumption
Eventual return of nuclear power will cut into Japan's oil use
Property market correction in China will affect demand for fuel products
Some governments looking to remove subsidies while prices are weak
Russian consumption shows resilience in 2014
Debate over an OPEC supply cut continues to rage
Saudi Arabia will carry on with new projects despite price slides
Iraq agrees to lower production plateaus
Meeting on nuclear issue could direct future flows from Iran
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 on dramatic weakness in the market

China's consumption will return to trend growth in 2015-16
India's underlying demand for gold jewellery remains robust
Funds have already moved out of gold, so ETF exodus is now less likely
Retail investment will fall from the record highs of 2013
Competition from alternatives is driving a fall in industrial gold use
Depressed prices will hit producers that face higher costs
Canada will see rising output in 2015-16
Australian production will stabilise
Production in China and Russia will also help 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 reserves holdings
Net hedging will be positive, albeit on a small scale
Stocks and prices
Prices for 2015-16 lowered as few macro supports for gold

China's domestic market remains in slight deficit in January-August
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 13th consecutive monthly year-on-year rise in September
US vehicle sales increase by 5.5% year on year in the first nine months of 2014
China's lead concentrate imports are up considerably
Total smelting capacity is expected to rise strongly in 2014
Nyrstar announces upgrade package for Port Pirie smelter in Australia
Exide's Vernon plant remains on hold
Global mine production (excluding China) rises by 1.8% year on year
Rate of mine expansions is slowing
Stocks and prices
Prices will be range-bound until stronger Chinese demand emerges

Liquefied natural gas
2014 is expected to be the peak of Japanese LNG consumption
Mild temperatures have reduced South Korean demand
China will continue absorb a greater proportion of LNG imports
India's government is vacillating on raising domestic 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 market share will shrink owing to new Australian production
US will enter the market in a big way from 2016, changing its fundamentals
Algeria's exports will rise owing to new terminals
A difficult operating environment makes Nigerian expansion unlikely
Success of PNGLNG is spurring interest in other projects in Papua New Guinea
Tangguh expansion moves a step closer in Indonesia
Ukraine-related tensions are unlikely to derail Russia's LNG plans for now

Natural gas
US consumption will slow as local prices rise relative to coal
Russian consumption will be affected by a poor domestic economic performance
Agreement with Russia will ensure six months of supply for Ukraine
Ukraine crisis unlikely to affect supply to Europe
European gas demand will recover in the medium term
China's consumption outlook is cut on higher prices
New Indian government raises gas prices
Japan's return to nuclear will affect gas consumption
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
Production growth in Norway will be offset by a decline in the Netherlands
Saudi Arabia and Algeria will add new gas capacity
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
Indian consumption is revised up on stronger end to monsoon
Volatile data are masking the underlying state of Japanese demand
Spanish and German demand is pulling up the EU aggregate
North American consumption growth will return in 2014, despite bad weather
The Thai government is poised to sell more of its stockpile
Indonesian production will be stronger than expected in 2015-16
The Malaysian government is to offer incentives to farmers
Government steps in to support India's rubber farmers
The global supply glut is weighing down on Vietnamese production
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 to show signs of recovery in 2015-16
Like most major commodities, EU consumption of nickel will be slow
US consumption will grow on the back of strong economic output
China's stainless steel exports are taking share from other Asian producers
Smaller markets growing at a rapid pace help to bring up the overall market
Mine output will contract substantially in 2014
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 to 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 outlook will support steel consumption growth in 2015-16
Performance in Europe will be weak as economic conditions remain fragile
A second tax rise in 2015 poses risks for 2016 steel consumption
India's consumption has struggled in 2014 but has potential to expand
Growth in "Other Asia" is likely to be anaemic
CIS consumption is increasingly subject to political risks
Latin American consumption growth will be sluggish in 2015-16
China's steel production will drop to single-digit growth rates
Restructuring likely as Chinese millers struggle to get credit
Domestic outages have opened the door to strong imports in the US
Rising imports trigger anti-dumping complaints
A cheaper euro could help European exports
CIS steel output will recover slowly in 2015-16 after a tough 2014
Japan's exports will face competition from cheaper origins
Rupee depreciation should help Indian steel mills, despite weak local demand
New capacity is driving strong production growth in the Middle East
Iron ore prices have fallen sharply in 2014
Coking coal production cutbacks will affect the market in 2015
Scrap prices will be depressed by falling iron ore and coking coal prices
Stocks and prices
Asia will continue to have the world's cheapest steel prices

Global semiconductor shipments are running at record levels
Chemical use of tin will exceed plate use in 2014
Consumer demand trends should be supportive of tin consumption
China will continue to shape direction of global tin market
Japan's tin use will stabilise at 28,000 tonnes in 2014-16
Europe's tin consumption prospects are clouded by euro zone uncertainty
China's tin mine output is likely to be at full capacity already
Timah, Indonesia's largest tin producer, is struggling with mine output
Indonesia displays some flexibility on export requirements
Political changes will be key to Indonesia's future impact on markets
Indonesia's exports are at their lowest levels since 2007
Brazil and Bolivia are adding to tin mining capacity
New tin mines are being developed in Australia and Africa
Myanmar has the potential to be an important new source of supply
Stocks and prices
Tin prices will struggle in 2014-15 before a deficit-led rebound in 2016

Apparent consumption in China grew by 14.4% year on year in January-August
China's 2014 consumption growth estimate is raised to 11.5%
EU zinc consumption forecast for 2014 is lowered as headwinds intensify
Growth in US zinc consumption accelerates in January-August 2014
Japan's zinc demand will continue to grow slowly
Chinese refined zinc production is increasing by 10%
EU refined zinc production posts 3.8% growth so far in 2014
Expansions bolster Asian output
We expect net mine capacity to rise in 2014
Producers will restart mothballed sites amid expectations of firmer prices
Stocks and prices
China is believed to be taking measures to further curtail finance activity
SHFE stocks continue to decline, down by 40% in late October 2014
LME zinc cash price to average US$2,178/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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