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The World Bank reported that all main commodity price indexes are expected to decline in 2015, mainly due to abundant supplies and weak demand in industrial commodities, in its July 2015 Commodity Markets Outlook.
The World Bank reported that all main commodity price indexes are expected to decline in 2015, mainly due to abundant supplies and weak demand in industrial commodities, in its July 2015 Commodity Markets Outlook.
As quoted in the market news:
Most commodity prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities (Figure 1). One main exception was the price of crude oil which rebounded early in the quarter on stronger demand but has since weakened owing to a still large global surplus. These trends are expected to persist for the rest of the year, with a modest recovery in 2016 (Figure 2). This issue’s Special Focus looks at China’s and India’s commodity consumption patterns. It concludes that demand from China, and to a lesser extent India, significantly raised global demand for metals and energy—especially coal—and less so for food commodities. This pattern reflected the countries’ different growth models and the way in which consumption responds to income growth.
All main commodity price indices are expected to decline in 2015, mainly due to abundant supplies and, in the case of industrial commodities, weak demand (Table 1). Energy prices are projected to average 39 percent below 2014 levels, largely reflecting the drop in oil prices. The earlier projection of $53/bbl (April Commodity Markets Outlook) has been revised upwards to $57/bbl, reflecting stronger demand, especially in the United States. Natural gas prices are expected to decline across all three main markets—U.S., Europe, and Asia. Coal prices are projected to fall 17 percent due to weak import demand and surplus supply.
Downside risks to the energy forecast include higherthan-expected non-OPEC production (supported by falling costs) and continuing gains in OPEC output, notably from Iraq, Saudi Arabia, and Iran (especially in view of the recent agreement on its nuclear program). Upside risks include earlier-than-expected closure of high-cost operations, supply restraint by major producers, and unexpected disruptions in supply stemming from geopolitical risks.
Click here to read the full World Bank July 2015 Commodity Markets Outlook report.