World Commodity Forecasts Industrial Raw Materials

  • ID: 2101443
  • August 2016
  • Region: Global
  • 109 Pages
  • The Economist Intelligence Unit
1 of 3

Despite a dismal start, the first half of 2016 saw metals prices stage a modest rally; July 1st was the first day of the year for which the London Metal Exchange cash price of the six base metals that The Economist Intelligence Unit tracks exceeded their end-2015 level. Stocks of mining firms also fared better, recovering from multi-year lows in January; in early July the FTSE world mining stock price index was up on a year-on-year basis for the first time since September 2014. China's efforts to stabilise the economy after the panic in January, coupled with the oil price rally to US$50/barrel and a slightly softer US dollar, have supported demand and investor sentiment towards commodities.

However, we remain cautious about the global economic outlook and, in turn, the state of commodity markets. Following the UK's vote to leave the EU, we lowered our global growth forecast in 2016 from 2.3% to 2.2%. For 2017 we now expect growth of 2.4%, from 2.6% previously. Subdued demand in developed economies and persistent anxiety about the ability of the Chinese government to cool its economy at a steady pace will continue to weigh on world economic expansion. The surge in the price of 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
It is too early to call a sustained rally in industrial commodity prices
Metals producers are beginning to respond to persistently low prices
The outlook for cotton and rubber prices is subdued
Oil price have fallen back slightly in the wake of the Brexit vote
The price of Brent will peak in mid-2018

Brexit vote could destabilise EU aluminium demand in rest of 2016
Chinese woes ease as stimulus packages start to reap rewards
Demand for aluminium in the US has been buoyant in early 2016
Japan's aluminium usage slides as construction contracts
Strong Chinese prices are encouraging further smelter restarts
Production (excluding China) close to 26m t/y for five consecutive years
Production in the GCC should start to plateau as plants operate at capacity
Hindalco and Vedanta push Indian output to new highs
US restarts in 2017 are unlikely against the price outlook
Higher pricing in March-April has failed to trigger restarts outside China
Stocks and prices
Overcapacity will hurt the aluminium sector for years to come
LME aluminium drops, but a rising trend is underway

We expect China's coal demand to decline slightly in 2016-17
Stricter environmental regulations are detrimental to US coal demand
Coal use will fall in the EU in 2016-17
India's coal consumption will remain robust
China's output will fall amid low prices and soft demand
US production is on a downward trajectory
The Indian government will struggle to double production by 2020
Australia will achieve a marginal increase in output in the near term
Stocks and prices
Average prices will continue to fall in 2016, before picking up in 2017

Copper demand will keep rising in China, despite slowing GDP growth
China is considering building base metal stockpiles
India will fuel Asian copper consumption
European copper consumption is rising quickly
Peru is set to remain the second-largest global copper mining country in 2016
Mining faces challenges in Chile, the biggest copper mining country
Risk of further production cuts recedes as cost cutting improves margins
Policy uncertainty weighs on Indonesia's copper sector
Treatment charges face upside pressure, as mine production is growing strongly
Contrary to earlier declarations, Chinese smelters are not showing much restraint
Stocks and prices
Chinese stocks rise on high imports and weak arbitrage rates
Combined LME/SHFE stock levels are virtually unchanged so far in 2016
Following the UK's Brexit vote, we have lowered our 2016 price forecast

China's falling competitiveness is weighing on consumption
Despite textile-sector reforms, India's consumption growth will be modest
A power deficit and high operating costs hinder growth in Pakistan
Consumption in Bangladesh will grow, regardless of poor safety standards
Vietnam's consumption is set to continue to rise quickly
China's output will drop as subsidies are trimmed and production costs rise
More normal weather conditions will support modest output growth in India
Stable cotton prices will support output growth in the US in 2016/17
Pakistan's production is set to rise in 2016/17, from a 17-year low in 2015/16
High input costs and weak support for farmers weigh on Brazil's output
Stocks and prices
Chinese import restrictions will be negative for prices
Auction sales in China will weigh on prices
High stocks and weak demand growth will limit price growth

Crude oil
US consumption growth in 2016 will decelerate
Brexit uncertainty will weigh on European oil demand
China's demand growth will edge down
Other emerging markets will not make up for China's slower demand growth
Unplanned interruptions eat into 2016 output
Doha's failure has reinforced our forecast for rising OPEC output
US production will dip in 2016, and further in 2017
Russian producers hope to delay what seems an inevitable decline until 2017
Stocks and prices
Oil prices have fallen back slightly in the wake of the Brexit vote
The price of Brent will peak in mid-2018

Net retail investment will pick up
Higher gold prices will take their toll on gold jewellery purchases in 2016-17
Industrial gold is less competitive than alternatives
A few central banks continue to accumulate gold
Chinese production will add to global supply in the short term
Australia's production looks set to continue rising in 2016-17
US-dollar strength will undermine US-based mines' profits
South Africa's gold output will continue to slip
Low prices will deter recycling efforts in 2016
Producer hedging will add little supply in 2016-17
Stocks and prices
Brexit vote has significant impact on gold price forecast

The outlook for lead-consuming sectors in China is mixed
China consumption is overshadowed by persistent destocking in the short term
Japan's lead demand will stabilise in 2016-17
Europe's car sales were up by a strong 9.9% year on year in January-May
Strong car sales in the US may not boost lead consumption immediately
Chinese refined lead production fell by 3.6% year on year in January-May
Some capacity additions are planned outside China
Global mine output dropped by 5% in January-April owing to closures
Stocks and prices
LME/SHFE stocks are up by 6.7%, or 13,683 tonnes, so far in 2016
Lead prices seen stabilising across 2016-17, but to remain volatile

Liquefied natural gas
Japan's LNG demand appears in long-term decline
Japan is seeking to become a hub for flexible LNG trading
South Korea's imports are likely to continue to fall, despite new energy plan
Reform of wholesale pricing appears to be boosting China's LNG uptake
India's LNG imports have surged so far this year
Egypt is an increasingly important market
The EU will absorb much of the new supply in 2016-17
LNG as a marine fuel is set to grow
Qatar is having to adapt to greater competition in the market
Australia's LNG plants are coming on stream
Asian producers are ramping up output
The US will be a significant LNG exporter by 2018
Trinidad's LNG output appears in long-term decline
Angola LNG will restart in 2016
Producers will be forced into greater flexibility in their contracts

Natural gas
US demand will continue to increase, albeit at a slower pace than in 2015
Europe's gas demand will show a more settled pattern
Russian consumption will be limited by the domestic economic performance
Russia consolidates European market share
China seeks to stimulate demand recovery with lower city-gate prices
A return to some nuclear use will come at the expense of Japan's gas demand
North American production continues to benefit from strong 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
Price recovery will be muted, owing to high production and stock levels

Natural rubber
China's NR usage in 2016 is off to a strong start
India's rubber consumption should revive, but risks are to the downside
Japan's NR usage is likely to contract this year
Other Asia consumption is being boosted by stockpiling
Usage looks set to fall sharply in North America
EU consumption growth is likely to slow following the UK's vote to leave the EU
Brazil's economic woes will stifle demand
Low oil prices will enhance the appeal of SR in 2016
Thailand's rubber output appears to be holding up well
Indonesia is expanding planted area
Growth in Vietnam's production will slow
Malaysian production fell sharply in the first quarter
India's production may pick up in 2017, encouraged by higher prices
Stocks and prices
A rally in prices will take hold from the fourth quarter of 2016
Plan to withhold exports should support prices

Weakness in the stainless steel sector will weigh on China's nickel demand
Chinese steelmakers are turning to alternatives for nickel pig iron
Nickel use will grow in most advanced economies, albeit slowly
After two years of strong growth, nickel usage in Taiwan is falling back in 2016
Investment in nickel mines in the Philippines is slow to materialise
The government in New Caledonia is stepping in to support the nickel sector
Indonesia's policy heightens uncertainty for miners and refiners
China's nickel producers face myriad challenges
Russia's refined nickel output growth will fall in 2016
Stocks and prices
Having fallen to a six-year low, prices will begin to recover in 2016

Credit boost provides short-term support for Chinese steel demand
US automobile sales and construction will support North American demand
Brexit may not have a huge immediate impact
We have revised downwards our outlook for "Other Asia" demand
Restructuring is likely to be postponed amid credit infusion
US steel output will see a rebound in 2016
NAFTA governments are targeting steel dumping
The UK steel industry is fighting for survival
The EU is stepping up AD measures
India's steel production is struggling, despite import restrictions
Iron ore prices will ease after surging in March-April
Coking coal production cutbacks will return the market to balance from 2016
Scrap prices have finally adjusted to lower iron ore and coal prices
Stocks and prices
Utilisation rates will struggle to rise above 75%
The rally in prices has lost steam and we expect further softening later in 2016

Tin consumption has been mixed so far in 2016
Expanding use of consumer electronics will support tin demand in 2016-17
The chemicals sector is expected to add to tin demand, unlike tinplate
China's tin demand growth, although slowing, looks set to continue
European tin demand will return to slow growth in 2017
US tin demand is in long-term decline
Long-term prospects for Japan's tin consumption look limited
China's production is breaking records, owing to ore supplies from Myanmar
Regulations and resource depletion are undermining Indonesia's tin sector
There are doubts about Indonesia's tin mine output potential in the long term
Only a small number of new mines and expansions are expected in 2016-17
Stocks and prices
Tin prices will rebound in 2016-17 amid gradual market tightening

China's zinc demand will grow by 5.5% a year in 2016-17
Overcapacity in the steel sector will weigh on Chinese zinc use
Commodity-exporting emerging markets will grow slowly in 2016-17
EU passenger-vehicle sales grew by 9.9% year on year in January-May
Destocking by steelmakers is lowering growth in apparent zinc us in the US
There is little sign of Chinese producer restraint amid higher prices
Output will fall in most regions in 2016, with South Korea a notable exception
Tighter ore availability is becoming evident
Benchmark TC deals in 2016 set well below the 2015 record
Stocks and prices
LME and SHFE stocks are displaying diverging trends
Prices are forecast to rise gradually in 2016-17, due to supply cuts

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
  • Mintec Ltd
  • Roland Berger Strategy Consultants