December 16, 2014
Global Metals Playbook: 2015 Outlook Back to Metals
Re-positioning for upside: Commodity trades continue to report lower prices or generally signal weakness. Market commentary is overwhelmingly bearish, focusing on implications of the price
falls. Yes, China’s moderating demand growth is an important factor here. However, we see relentless supply growth to earlier higher prices as the dominant, fleeting driver. Once rebalancing occurs, opportunities will emerge in these markets. We direct investors to seek favourable market structures, and to position
correctly for ongoing evolution in these structures.
• Big cuts to bulks’ price forecasts: Widespread surpluses, a
high/rising USD, an OPEC-led decline in crude oil prices – all
influence the revisions to our medium- to long-term price
forecasts (includes incentive price analysis for 2015-21). Our
largest cuts have been for iron ore and coals (26-33%); changes to metals are relatively modest (5-12%). • We like metals: China’s multi-decade materials-intensive growth
cycle is maturing in a way that requires less bulks, more metals. China’s simple shift competes with the US metals demand growth
story. With this backdrop, we prefer nickel, copper and zinc.