World Commodity Forecasts Industrial Raw Materials

  • ID: 2101443
  • October 2015
  • Region: Global
  • 120 Pages
  • The Economist Intelligence Unit
1 of 3

The Economist Intelligence Unit expects only a modest pick-up in the prices of Industrial Raw Materials (IRM) in 2016, following four straight years of decline in 2012-15. The commodity complex was hit by the plunge in oil prices in the second half of 2014 and there are no signs yet that investors are regaining their appetite for holding commodities. Broad-based US-dollar appreciation is also sapping demand for commodities (most commodity prices are dollar-denominated). In addition, softening economic growth in China-with performance in industries flagging so far this year-is undermining demand for industrial raw materials. China's economic rebalancing away from a dependence on investment, coupled with the recent plunge in equity prices, will dent uptake of several commodities, for which China is the largest market. However, after a double-digit decline in 2015, IRM prices are slated to rise by 3.3% in 2016, as higher energy prices push up production costs and widespread cuts to operations lead to a tighter market. Further tightening will occur in 2017, but amid still-ample stock availability we do not expect prices to increase by more than 4.6%.

Base metal prices will stage READ MORE >

Note: Product cover images may vary from those shown
2 of 3

World Commodity Forecasts Industrial Raw Materials

Economist Intelligence Unit commodity price index
Industrial prices will begin to recover in 2016
Weak Chinese demand will keep copper prices down in 2016
Oil prices will recover only slowly from their collapse in 2015
Some of the drivers of rising demand in 2015 will fade in 2016
Despite a fall in output in 2016, US shale will weather the price slump
OPEC production will continue to rise

Chinese demand growth for 2015 revised down to 8.2%
Growth in Chinese semis output and exports eases slightly in early H2
US aluminium demand remains buoyant
Aluminium demand growth continues to outpace that of other base metals
Non-Chinese smelters are waiting for a supply response from China
Chinese plants are starting to cut, but are production statistics misleading?
Intervention of local authorities still complicates the smelter closure process
Depressed LME prices will put some European smelters at risk of closure
Indian smelter commissioning is making only slow progress
Production costs are falling but are failing to counter lower metal prices
Stocks and prices
Any near-term recovery in aluminium prices will come from external factors

We expect China's coal demand to decline further in 2016-17
A rebound in US consumption is on the cards in 2016
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
China's output growth will be nearly flat amid low prices and soft demand
US production is on a downward trajectory
The Indian government will struggle to double production by 2019
Indonesia's coal sector faces many headwinds
Stocks and prices
Coal prices will remain under US$60/tonne until end-2015

China's apparent consumption growth continues to weaken
China's State Reserve Bureau appears less active so far in 2015
Real Chinese copper consumption remains steady
Japanese copper consumption will see minimal growth in 2015-16
Destocking holds back copper demand in Asia (excluding China)
European copper will benefit from slightly improved economic conditions
US copper demand to record minimal growth in 2015-17
Mine production from Latin America is up by 2.8% in the first half of 2015
Export disruptions are re-emerging in Indonesia
Producer disruptions intensify since mid-2015
The concentrate market is expected to tighten again from 2017
China's refined copper output growth will begin to slow in response to lower prices
Chinese scrap imports fell by 3.3% in January-July
Stocks and prices
Chinese bonded-warehouse stocks have risen since late January
LME warrant cancellations at 12% in late August
Our price forecast is lowered further as weakness intensifies

China is struggling to reduce stockpiles, despite slashing import levels
Inadequate textile-sector reforms will weigh on India's consumption growth
A power deficit, policy uncertainty and slow reform hinder growth in Pakistan
Consumption in Bangladesh will grow, regardless of poor safety standards
Quicker growth in the EU will support consumption growth in Turkey
China's output will drop, despite generous subsidies to Xinjiang farmers
Cotton remains attractive in India despite subdued prices
Low price environment will weigh on output in the US
Greater access to inputs will maintain elevated output levels in Pakistan
Production will slide in Brazil as weak prices affect planting decisions
El Niño poses downside risk to production in Australia
Stocks and prices
Large harvests and high stocks will put downward pressure on prices

Crude oil
US consumption growth in 2016 will decelerate
Demand in OECD Europe will revert to long-term decline
Japan's oil demand will remain on a downward trend, despite low prices
China's demand growth is stabilising
Low oil prices are making subsidy reform easier to swallow
OPEC members will maintain high production
A nuclear deal will enable Iran to raise output gradually
US production will dip in 2016, after resisting the price declines in 2015
We have revised up our outlook for Russian oil production in 2015
Canadian output will probably be flat in 2015
Stocks and prices
Prices will stage only a modest rebound in 2016

Lower prices should support jewellery consumption in China and India
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
Central banks will continue to buy gold to diversify their reserve holdings
China gold reserves
Chinese production will continue to add to global supply in the short term
After a strong performance in 2014, production in Australia will fall back
Peru's output has risen strongly in 2015, but downside risks remain
Low prices will deter recycling efforts
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

Chinese lead demand will return to growth in 2016-17
Passenger-vehicle sales in China are growing only slowly
The performance of the Chinese battery sector will remain mixed
Japanese lead demand will stabilise in 2016-17
EU lead demand is not benefiting from buoyant car sales, owing to high stocks
US lead consumption will not return to growth until 2016
Chinese refined lead production fell by 4.1% in January-July
The Vernon recycling facility will remain closed permanently
Global smelting capacity will expand in 2015
Additions to global mine capacity will offset planned closures in 2015
Stocks and prices
LME/SHFE stocks have fallen by almost 30% so far in 2015
Negative investor sentiment towards commodities has not spared lead

Liquefied natural gas
Japan's LNG imports are now expected to fall this year
High stocks will curb South Korea's LNG imports this year
China's imports will pick up in 2016-17
Indian imports will be boosted by the shortage of domestic gas
Middle East demand is growing strongly
South-east Asia is expanding its regasification capacity
European LNG consumption will grow strongly this year
Recession in Brazil will curb LNG demand
For now, a lack of infrastructure is curbing the use of LNG as a fuel
Qatar will remain the world's largest supplier until 2017
Australia's LNG exports are set to surge
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
Iran has the potential to enter the market
African LNG exporters are struggling to sustain output

Natural gas
US demand will pick up as coal shutdowns increase
Russian consumption will be limited by the domestic economic performance
Europe's gas demand will show a more settled pattern
Gazprom moves ahead with Nord Stream-2 as Turkish stream falters
China is continuing to develop its import supply routes
A return to some nuclear use will come at the expense of Japan's gas demand
North American production continues to benefit from US demand
Russian production will increase despite new sanctions
Shale exploration in Europe has so far been disappointing
Iran courts upstream gas investment following nuclear deal
Saudi Arabia is planning new capacity
Stocks and prices

Natural rubber
Growth in Chinese demand will pick up modestly in 2016-17
India's NR usage is expected to grow strongly in 2016-17
Japan's NR demand should rebound modestly next year
"Other Asian" demand should pick up in 2016-17
The EU auto sector has been growing strongly
Strong growth in car sales should bolster US rubber demand
Thai production will grow modestly this year
Indonesian production should post positive growth in 2016
Vietnam is expanding output
Malaysian production is struggling and stocks are falling
India's production is continuing to fall
Stocks and prices
Producers are again trying to support prices

China's volatile apparent consumption in part reflects stock movements
Worsening prospects in the stainless steel sector weigh on nickel demand
Modest growth in nickel use in advanced economies will not offset fall in China
Nickel mines in the Philippines will benefit from Indonesia's export ban
Australia and Canada are stepping up output
After mixed results from major mines in 2015, output will expand in 2016
Nickel companies are moving downstream in Indonesia
Russia's refined nickel output growth will be flat in 2015
Rising mine output will support refined production in Canada and Australia
Stocks and prices
Having fallen to a six-year low, prices will begin to recover in late 2015

Chinese demand will fall for a second consecutive year in 2015
US automobile sales and construction will support North American demand
Consumption 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 will slow in the near term due to poor margins
US mills cut output in early 2015
NAFTA governments are targeting steel dumping
EU moves to protect its steel industry
CIS steel output will recover slowly in 2015-16 after a difficult 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 narrow, low band in 2015-16
Cooking 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 down further

Semiconductor shipments are rising, but the rate of increase is slowing
Excluding China, production of tinplate is in long-term decline
Expanding use of consumer electronics will support tin demand in 2016-17
China's tin demand growth, while slowing, will continue to rise steadily
Long-term prospects for Japan's tin consumption are bleak
European tin demand growth is likely to slow in 2015-17
US tin demand bounced in 2014 but future prospects are mixed
China's output is setting new records owing to ore supplies from Myanmar
Indonesia has introduced a number of controls over tin exports
A third revision of Indonesian tin export regulations took effect in August
There are doubts about Indonesia's tin mine output potential in the long term
New tin mines are being brought on line in Africa and Australia
In South America, prospects for tin mine output are mixed
Stocks and prices
Tin prices will remain under pressure in 2015 before a rebound in 2016

Infrastructure projects will support zinc use in China, despite slower GDP growth
Brazil bucks stronger zinc usage from emerging markets
Recovering vehicle markets will support zinc consumption in Europe
High imports of galvanised steel are weighing down on US zinc consumption
Strong refined zinc exports from Japan act as a drag on apparent consumption
Growing ore availability and smelter capacity will boost Chinese production
EU refined zinc production growth is slowing in 2015
Outside of China, India leads refined output growth in Asia
Zinc concentrate market will tighten from 2016 as exhausted mines close
Stocks and prices
Chinese exports of refined zinc still exceed year-ago levels
Poor investor sentiment and Chinese smelters' activity weigh down on prices

Statistical appendix

Note: Product cover images may vary from those shown
3 of 3
Note: Product cover images may vary from those shown


  • Quick Help: The report will be emailed to you. The report is sent in PDF format. This is a single user license, allowing one specific user access to the product.


If you have a more general question about our products please try our



Our Clients

  • Aol, Inc.
  • Accenture PLC.
  • Unilever N.V.
  • Nestle S.A.
  • KPMG
  • Roland Berger Strategy Consultants