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World Commodity Forecasts Industrial Raw Materials

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

The Economist Intelligence Unit remains pessimistic about the outlook for Industrial Raw Materials (IRM) prices in 2015, after prices slid by 10.6% year on year in the first quarter. The commodity complex has been hit by the plunge in oil prices in the second half of 2014 and there are few signs as yet of investors regaining their appetite for holding commodities. Shrinking US-dollar liquidity (vital for dollar-denominated prices) will also sap demand from commodities. A softening economic performance in China-we are again lowering our 2015 real GDP growth outlook, to 6.8% from 7%-is compounding these issues. Several commodities have enjoyed some respite in April, in tandem with a rally in crude oil prices and a wobble in the US dollar. Yet we expect this to have been a transitory phase, as fundamentals in many markets remain bearish in the coming months. In line with these trends, we now expect our IRM index to contract by 5.6% this year, compared with 3.4% previously. This means that prices will decline for a fourth consecutive year. Despite some tightening in industrial commodities markets from 2016, demand will remain relatively subdued, which, together with ample stock availability, 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 begin to recover in 2016
The outlook for several base metals continues to worsen
Agricultural industrial products have a poor price outlook
The April rally in oil prices will not be sustained

Chinese aluminium demand will outpace the country's economic growth
US aluminium demand goes from strength to strength
Aluminium demand in the EU will outpace economic growth
Indian demand will strengthen in tandem with GDP growth
Substitution will help to maintain strong demand in 2015-16
Global aluminium output grew robustly in the first quarter of 2015
Chinese output hit record highs in March
Rusal intends to review part of its Russian operations
Lower oil prices will not trigger widespread smelter restarts
Aldel smelter restarts, but low demand puts some European smelters at risk
Stocks and prices
We are revising down price forecasts as sentiment worsens
The Chinese government springs a surprise
Premiums are falling and consumers are opting to stick to spot purchases

China has announced a public cap on CO2 emissions for the first time
China's coal consumption growth is likely to be almost flat in 2015-16
US coal consumption will start to decline again in 2015
Coal use will fall in the EU in 2015-16
The EU has adopted binding emissions targets to 2030
India's coal consumption will remain robust
Bangladesh aims to change its energy mix radically in favour of coal
Demand is beginning to soften in China at the start of a long-term trend
US production is on a downward trajectory
The Indian government is aiming to double production by 2019
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 accelerate in 2015-16
Stocks and prices
Coal prices to remain under US$60/tonne

China's copper consumption growth will remain faster than GDP growth in 2015
China's State Reserve Bureau has remained an active buyer of copper
China plans "record investment" in grid expansion in 2015
Japanese copper consumption growth will slow in 2015
Copper demand in Asia (excluding China) strengthened in early 2015
European copper demand growth will slow to 1% in 2015
US copper demand will record slow growth in 2015-16
Mine production growth is being boosted by expansion projects
Disruptions to Indonesian output will continue in 2015
Producer disruptions have been a feature of early 2015
The concentrate market is expected to tighten again from 2017
China's refined-copper output was up by 14.3% in the first quarter of 2015
Chinese scrap imports were down by 10.5% in the first quarter
Stocks and prices
Chinese bonded-warehouse stocks have been rising
LME warrant cancellations rise in early 2015
Our 2015 price forecast has been revised down

China is struggling to reduce stockpiles, despite slashing import levels
Inadequate textile-sector reforms will weigh on India's consumption growth
A power deficit and slow reform hinder growth in Pakistan's textile sector
Consumption in Bangladesh will grow, regardless of poor safety standards
Dependence on a slow-growing EU will weigh on consumption growth in Turkey
China's output will drop, despite generous subsidies to Xinjiang farmers
India is poised for a large increase in the planted area
The US is set to deliver a bumper crop
A high level of output is expected in Pakistan, despite flooding
Production will slide in Brazil as weak prices affect planting decisions
Dry weather in Australia's planting season prompts a sharp drop in output
Stocks and prices
Large harvests and high stocks will put downward pressure on prices

Crude oil
Chinese imports have picked up, in part reflecting stockbuilding
Low oil prices are making subsidy reform easier to swallow
US consumption will rise as consumers seek bigger cars
Weak economic performance will constrain oil demand in EU and Japan
Saudi Arabia will maintain high production
A nuclear deal will enable Iran to raise output gradually
US production will continue to rise in 2015, but not at recent rates
Outlook is weakening for Russian oil production
Canadian output will probably be flat in 2015
Stocks and prices
Prices will remain volatile in 2015

India has overtaken China as the largest consumer of gold jewellery
China's jewellery consumption will return to trend growth in 2015-16
The global economy remains broadly unfavourable for investment into gold
Funds have already moved out of gold, so ETF exodus is now less likely
Uncertainty about prices will weaken retail investment demand
Industrial gold is less competitive than alternatives
Chinese production will continue to add to global supply in the short term
After a strong 2014, production in Australia will fall back
The weak rouble is boosting Russian miners' margins
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 will remain under downward pressure in 2015, despite volatility
In focus: Changes to system establishing gold prices

After contracting in 2014, China's lead demand will grow again in 2015
Passenger-vehicle sales in China have risen sharply so far in 2015
Performance in the battery production sector will be mixed
Japanese lead demand will stabilise in 2015-16
European lead demand will benefit from QE and improved vehicle sales
US vehicle sales were up by 5.6% year on year in the first quarter of 2015
Chinese refined-lead production fell by 6.6% year on year in the first quarter
Exide's Vernon battery-recycling facility will close permanently
Global mine capacity is forecast to increase by 66,000 t/y in 2015
Stocks and prices
LME stocks fell by 21% between end-2014 and April 2015
Despite a rebound in LME prices in April, the outlook for 2015 is bleak

Liquefied natural gas
Delays to nuclear restarts in Japan will support LNG consumption
South Korea's LNG imports to grow modestly in 2016
China's imports will pick up in 2015-16, after slowing in 2014
Indian imports will boosted by the shortage of domestic gas
Energy-scarce South-east Asia is becoming an important LNG market
Europe will scoop up cheap supplies
Latin American demand will remain volatile
The transport sector is creating a new source of demand
Qatar will remain the world's largest supplier in 2015-16
Australia's LNG exports set to surge in 2015-16
Facility expansions will boost Malaysian exports
Low prices could deter investment in North America
Algeria's export potential may be curbed by rising domestic demand
African LNG exporters are struggling to sustain output
PNG looks set to increase output
Mergers to characterise the sector

Natural gas
US demand will pick up as coal shutdowns expand
Russian consumption will be affected by poor domestic economic performance
Agreement with Russia ensures six months of supply for Ukraine
Europe's gas demand will improve on a dismal 2014
EU formally accuses Gazprom of illegal conduct
China is continuing to develop its import supply routes
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
A cutback in US oil production could spark gas production downgrades
Russian production will increase despite new sanctions
Shale exploration in Europe has so far been disappointing
Saudi Arabia is planning new capacity
Stocks and prices
Healthy supplies will push down US prices in 2015

Natural rubber
Growth in Chinese demand will slow as the economy rebalances
High stocks will act as a constraint on India's rubber usage in 2015-16
Solid growth in Asian demand is likely
EU consumption will grow steadily in 2015-16
US consumption should pick up later this year
Flooding is likely to slow Thai production growth in 2015
Indonesian production should bounce back in 2016
Malaysian production is struggling and has been hit by bad weather
India's production is falling sharply, while imports are rising
We have revised up our forecast of Vietnam's production this year
Stocks and prices
Producers are again trying to support prices
Prices will stage a modest rally in 2015-16 as stocks are worked through

China's consumption will show signs of recovery in 2015-16
EU consumption of nickel will be held back by weak manufacturing output
US consumption will grow in 2015-16 but will not match strong 2014 levels
Smaller markets growing at a rapid pace help to bring up the overall market
Nickel mines in the Philippines will benefit from Indonesia's export ban
New Caledonia sees mixed results from major new mines
Some silver linings in Latin America's nickel mining sector
Nickel companies are moving downstream in Indonesia
Russia's refined nickel output growth will be flat in 2015
Downside risks remain for Australia and Canada
Stocks and prices
A market deficit will help to boost prices in 2015-16

After a dip in 2014, Chinese steel use will expand modestly in 2015-16
US automobile sales and construction will support North American demand
Performance in Europe will be weak despite some support from the ECB
Growth in "Other Asia" is likely to be steady, but not spectacular
Lower energy prices should have little short-term impact on Gulf steel demand
China's steel production growth will drop to low levels
US mills cut output in early 2015
Both the US and Canada are targeting steel dumping
EU output struggles in early 2015, but should improve through the year
CIS steel output will recover slowly in 2015-16 after a tough 2014
Japan's steel exports will face tough competition
Better business confidence in India has failed to translate into higher output
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
Lower raw material prices will drive steel prices to even greater declines

Semiconductor shipments are rising, but the rate of increase is slowing
Production of tinplate is in long-term structural decline, excluding China
Expanding use of consumer electronics will support tin demand in 2015-16
China will continue to shape outcomes in the global tin market
Japan's tin consumption appears to be in long-term decline
After a rebound in 2014, demand growth in Europe will slow
After a record 2014, China's refined tin output will stabilise in 2015-16
Myanmar has emerged as a major source of tin raw materials for China
Indonesia has introduced a number of controls over tin exports
There are doubts about Indonesia's longer-term output prospects
Brazil and Bolivia are adding to tin mining and processing capacity
New tin mines are being brought on line in Australia and Africa
Stocks and prices
Tin prices will remain under pressure in 2015 before a rebound in 2016

Chinese zinc consumption will be supported by infrastructure projects
Zinc use in the EU to be supported by continued recovery in auto industry
US zinc consumption growth will moderate in 2015-16
Japan's zinc consumption to moderate as economic headwinds persist
China is becoming the swing producer of refined zinc
EU refined zinc production growth is slowing in 2015
Outside of China, Asian refined output faces headwinds
Growth in net mine capacity is set to slow in 2015
Stocks and prices
China exported high levels of refined zinc in early 2015
LME stocks continue to fall
The LME zinc price strengthened as the second quarter began

Statistical appendix

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


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