Metals prices are projected to decline by 8 percent in 2016 due to slowing demand in emerging economies, notably China, and increases in new production capacity, the World Bank said in its latest quarterly commodity report.
“The largest decline is for nickel, which is expected to fall by 22 percent due to weak demand and insufficient production cuts,” the reports said, adding iron ore prices were expected to fall by 10 percent and copper by 9 percent.
Most other prices are expected to fall as markets remain in surplus amid high stocks, the report added.
“Markets are expected to tighten in the medium term due to reduced investment in supply capacity, rising global demand, and some specific factors, including Indonesia’s ore export ban and closure of large zinc mines due to exhaustion.”
The report said downside risks to the forecast included slower demand in China and higher-than-expected production due to further cost reduction, adding that upside risks were centered on stronger global demand growth and supply shortfalls from project delays, operational disruptions, falling ore grades, environmental constraints, and greater closure of high-cost capacity.