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World Commodity Forecasts Industrial Raw Materials Product Image

World Commodity Forecasts Industrial Raw Materials

  • Published: September 2014
  • Region: Global
  • 126 Pages
  • The Economist Intelligence Unit

The Economist Intelligence Unit still expects its Industrial Raw Materials (IRM) price index to fall by 3.5% in 2014, its third consecutive year of decline. Although prices have started to recover in several critical industrial markets, weakness at the start of the year, as China's demand trajectory was uncertain, will weigh on average prices. In 2015 prices will move upwards as a faster global economy draws in demand for industrial inputs.

Aluminium appears to have shaken off much of its earlier weakness and is now trading at over 20% higher than its February lows. Outside China, the market for the light metal is tight owing to delays in getting material out of warehouses and production cutbacks from leading metals. However, substantial transparent stock levels may limit any extended run in 2014. Prices will break over US$2,000 tonne in 2015 but will remain below the elevated levels seen in 2005-07. Copper markets have also strengthened, after spending most of the second quarter below US$7,000 tonne. Uncertainty over the effects of China's mini stimulus measures and an investigation into potential misuse of copper as collateral in a port at Qingdao sapped interest away from READ MORE >

World Commodity Forecasts Industrial Raw Materials

Economist Intelligence Unit commodity price index
Industrial prices will fall in 2014 before a turnaround next year
Outlook for rubber this year remains poor
Oil prices on track to slide in 2014-15 as market stays in surplus

Aluminium
Demand
Key aluminium-consuming regions show increasingly divergent trends
Outside China, overall growth is very limited, according to the WBMS
Japanese consumption is surging
Indian demand patterns remain puzzling
Supply
Increases in GCC output ease, as new capacity is now almost fully ramped up
India's new production is coming on slower than expected
There are now early signs of Chinese smelter capacity being restarted
Improving prices and premiums mean closure threats could be receding
Stocks and prices
Tight markets outside China are generating a price rally
The time is still not right for widespread capacity reactivation
Price rises in 2015-16 will be limited by a heavy stock position

Coal
Demand
Hydropower is replacing coal use in the short term in China
China's new policies will act as structural limits to long-term demand
Bump in use in 2014 does not mean that the US is going back to coal
Coal use will fall in the EU in 2014-15
India will be among the fastest-growing markets in Asia
Japan is committed to keeping coal in its energy mix
Asia will remain the driver of global coal consumption
Supply
China's output will struggle in the face of weaker local demand
US production will not be affected by EPA laws in the near term
India will consider structural reforms to improve coal output
Production in Australia is under pressure as prices decline
Indonesia is making new attempts to control exports and production
Russia is trying to revamp its coal industry
South Africa's mining industry is coming under downward pressure
Colombia's output will resume growth in 2014-15
Stocks and prices
Coal prices are at multi-year lows

Copper
Demand
China apparent consumption remains elevated, but growth rates are waning
SRB is believed to have a remit to acquire up to 400,000 tonnes this year
Double-digit growth in output of semi-fabricated products drives real usage
Growth in Japanese copper consumption is slowing
Copper demand growth looks strong across Asia this year
European copper demand is growing, but not spectacularly
US apparent copper consumption growth is forecast at 2.6% in 2014
Supply
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 McMoRan is granted an export licence by the Indonesian government
Disruptions at smelters are also occurring
Re-tightening of the concentrate market is expected from 2017
Growth in China's refined copper production to moderate to 9%
Chinese scrap imports down by 14.8% in the first half of 2014
Stocks and prices
China's SRB may not be finished with its copper-buying spree for this year
Chinese bonded warehouse stocks may have peaked for a while
Prices to average over US$7,000/tonne in the second half of 2014

Cotton
Demand
Cotton consumption in China will remain subdued
India's millers will take time to adjust to the loss of the China market
The Pakistani government is seeking to support the textile industry
Consumption in Bangladesh will grow, regardless of poor safety standards
Support from a weak lira will wear off in Turkey
Supply
China introduces new subsidy payment system, but only in Xinjiang
Indian production is expected to pick up despite reduction in planted area
US production forecast for 2014/15 is revised upwards
Pakistan seeks to protect domestic farmers from Indian competition
Production is set to grow strongly after a weak 2012/13
Uzbekistan has pledged to improve the image of its sector
Australia's production is subject to a bearish outlook
Stocks and prices
Concerns about US production will offer some support for prices in 2014

Crude oil
Demand
US economy's recovery trajectory supports higher oil demand
US refiners will benefit from captive crude
European oil demand will remain sluggish despite monetary stimulus
Eventual return of nuclear power will cut into Japan's oil use
China's oil consumption is turning around
Diesel powered generators are likely to support higher consumption in India
Subsidised prices will support growth in Middle East oil consumption
Russian consumption will slide as economy weakens
Supply
Saudi Arabia output will be affected by investment
Iraq's political turbulence is weighing on near term production outlook
IOCs will return to Iran only if all sanctions are lifted
Libya's output will struggle for the rest of 2014
OPEC's African producers struggling to raise output to targeted levels
US oil production will continue to grow strongly
Canada is seeking export opportunities for its heavy oil
A more liberal Mexican oil scene is likely
New sanctions will challenge Russia's unconventional oil plans
Operational challenges are hampering Brazil's production prospects
Stocks and prices
Brent prices were switched to contango in July

Gold
Demand
China is unlikely to repeat 2013's stunning growth in 2014
India's budget proposal for 2015 maintains high import taxes on gold
Geopolitical risks provide some support for gold investment
Retail investment will fall from the record highs of 2013
Competition from alternatives is driving a fall in industrial gold use
Supply
China's production will help to add to global supply in the short term
The new Tropicana mine is driving output growth in Australia
Lower gold prices will drive 2014 output down in Russia and the US
South Africa's gold sector is in structural decline
New mining centres will make up for lower output among large producers
Scrap sales will decline in 2014 owing to weak prices but will stabilise in 2015
Russia drives continued central banks' purchases
After two years of de-hedging activity, there will be net hedging in 2014-15
Stocks and prices
Prices will fall on an annual basis in 2014

Lead
Demand
Economic and geopolitical volatility will cut into lead demand
China's domestic market in slight deficit in early 2014 amid softer demand
China vehicle sales record 8.4% growth in the first half of 2014
Lead-acid-battery production returns to growth
Japanese lead demand forecast raised as positive sentiment supports car sales
EU demand forecast is raised further as auto-market recovery continues
US demand growth will slow in 2014, reflecting destocking
Supply
Chinese production forecast is trimmed further, owing to maintenance closures
Total smelting capacity is expected to rise strongly in 2014
Nyrstar announces upgrade package for Port Pirie smelter in Australia
Slow Chinese activity leads to contraction in global mine production
Rate of mine expansions is expected to slow in 2014
Stocks and prices

Liquefied natural gas
Demand
Potential nuclear restart will limit Japanese demand from 2015
Stockbuilding at new terminals will see South Korea's imports rise in 2015
China will take greater share of LNG import market
Liberalisation of gas prices could lead to higher LNG demand
New markets are emerging in South-east Asia
Europe's imports will move eastward from 2015
Supply
Qatar's production will be steady in 2014-15
Output in Malaysia is still expanding, despite strong growth in 2013
US government revises its LNG approval process
A new export terminal is scheduled to open at Arzew in Algeria
Angola LNG has been shut down until at least 2015
New projects are unlikely in Nigeria
Australian projects will lead to significant reshaping of global industry
PNGLNG starts ahead of schedule, meeting demand in Japan
Tangguh expansion takes a step closer in Indonesia
Ukraine-related tensions are unlikely to derail Russia's LNG plans for now
Prices

Natural gas
Demand
Cold weather in US supporting consumption surge in winter months
Russia's gas demand is currently saturated
Consumption in Ukraine is threatened by civil unrest
European demand will continue to balance between gas and coal on prices
LNG is taking a larger share of China's gas imports
Higher wholesale prices in 2014 will boost output and consumption in India
Restart of nuclear power would cut into Japan's gas demand
Steady growth expected in consumption in key Middle East economies
Supply
Demand from LNG export projects will lead to US output growing in 2014-15
Russia's output to tick up in 2014-15 as LNG projects near completion
Production from the Caspian region is set to ramp up in the next few years
Shift to Arctic production will help European supply to recover
Iran will add new capacity to the Middle East
Long-term projects will see output rise elsewhere in Middle East and Africa
Stocks and prices
Prices spike in the US on cold weather and annual levels revised upward

Natural rubber
Demand
Demand in China in 2014-15 will struggle to match the growth of 2013
Indian consumption to be over 1m tonnes by 2015
Momentum is returning to the Japanese economy
EU demand is likely to rise in 2014, led by growing Spanish consumption
North American consumption growth to recover in 2014, despite bad weather
Supply
Drought, low prices and political unrest are reducing Thai output
Indonesian producers will look to exploit weak Thai production
Malaysian output is struggling amid structural problems
Government steps in to support India's rubber farmers
Weaker Chinese demand will push down Vietnamese production
Stocks and prices
Prices will remain weak in 2014-15 as stocks hang over market

Nickel
Demand
China's dominance of nickel market will diminish owing to ore shortages
China is seeking alternative ore sources to Indonesia
Significant headwinds remain in the face of stronger EU nickel demand
US consumption will improve strongly in 2014-15
Outside China, Asian markets are mixed
Smaller markets growing at a rapid pace help to bring the overall market higher
Supply
Mine output will contract substantially in 2014.
Disruptions at Vale site affecting New Caledonia's output
The Philippines will benefit from the Indonesia ban
Indonesia's ore export ban will continue to disrupt the market
Australia's output will flatline in 2014; Canada's will start recovery by 2015
Russian output is unlikely to be affected by sanctions in the near term
Stocks and prices
Prices have breached US$20,000, and will stay high in 2014-16

Steel
Demand
China's consumption will remain strong, despite slowdown in GDP growth
Construction and autos support US demand
Further loosening of monetary policy will support demand for steel
Higher Japanese consumption tax poses only a minor risk to steel consumption
New government in India has opportunity to drive steel demand
Growth in "Other Asia" is likely to be anaemic
CIS consumption is increasingly subject to political risks
Latin American consumption will disappoint
Supply
China's steel production will drop to single-digit growth rates
The prospect of industry restructuring in China is looming
A series of operating issues hit NAFTA steel output in the first half
Rising imports trigger anti-dumping complaints
EU output will be very uneven in 2014
Weaker demand to hit CIS output, but exports benefit from currency weakness
Consumption tax rate rise will dampen demand in Japan
Rupee depreciation should help Indian steel mills, despite weak local demand
Middle Eastern output is growing strongly
Iron ore prices have fallen sharply in 2014
Capacity closures could push up coking coal prices
Scrap prices will be depressed by falling iron ore and coking coal prices
Stocks and prices
Over capacity will weigh on prices in 2014-15

Tin
Demand
Record global semiconductor shipments will be led by Asia and the Americas
Consumer demand trends should be supportive of tin consumption
China will shape direction of global tin market
Moderate recovery is expected in Japan's tin consumption in 2014
Despite improving economies, US and EU demand to be flat
Supply
China's tin mine and refined output are not expected to increase in 2014-15
Timah, Indonesia's largest tin producer, is struggling with mine output
Indonesia to add further restrictions on exports
Indonesia's exports slow because of requirement to trade on local exchange
Brazil and Bolivia will bring on new tin mine 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
Concerns about supply-side stability should support tin prices in 2014

Zinc
Demand
Apparent consumption in China grew by 11.6% year on year in January-May
Mini-stimulus measures in China will continue to support zinc demand
EU zinc consumption is unchanged so far in 2014
Growth in US zinc consumption has accelerated strongly so far in 2014
Japan's zinc demand will increase by 2% a year in 2014-15
Supply
Chinese refined zinc production is up by 7.1% so far in 2014
EU 2014 refined zinc production growth estimate is revised higher, to 3.2%
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 13.7% by late July 2014
2014 price outlook raised as LME stocks fall and investor sentiment improves

Statistical appendix

Note: Product cover images may vary from those shown

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