Commodities Comment:Assessing the 2015 demand risk

2015 demand forecasts for metals have been moving steadily lower since themiddle of last year. However, the return of European macroeconomicconcern, a conspicuous Chinese consumption vacuum plus slowing globalindustrial output has brought into focus the potential for further weakness. Forcopper, aluminium, zinc and iron ore we consider the effect on our expectedbalances from a range of different demand scenarios.

    The expectation of a balanced copper market is sensitive to demandassumptions, both for China and the developed world. Aluminium shows thebiggest potential market swing under our demand scenarios, while in zincthere is still a skew towards a deficit. For iron ore however, it remains allabout displacement whatever way you look at it.

    Latest news

    Precious metal prices dived in late London trading on Thursday (with muchof the fall coming after the benchmark prices shown on the left wererecorded). Silver fell over 6% DoD, platinum and palladium 3% and gold 2%as the US dollar strengthened in the wake of the Fed’s ‘steady as she goes’statement following Wednesday’s FOMC policy meeting and positive jobsdata. Base metal prices also moved lower.

    The Chilean government announced on Thursday that copper output in theworld’s biggest mining country amounted to 523kt in December, up 9.5%MoM as a result of the typical end-of-year push to hit targets, but down 0.5%YoY. The result meant that the government’s reported 2014 total amounted to5.78Mt