Prices for industrial raw materials will fall by an average of 41 per cent in 2009, according to the latest forecast by the Economist Intelligence Unit (EIU).
Falling demand in the automotive, consumer electronics and property sectors have left prices for base metals such as aluminium, copper, lead and nickel “particularly vulnerable”, reports the EIU. It expects average prices to drop by 47 per cent this year, with only a modest recovery of 12 per cent in 2010.
Crude oil prices are set to slide even further. The EIU expects its weighted index to fall by 64 per cent in 2009, with an average price of $35 a barrel for Brent crude and $37 a barrel for West Texas Intermediate.
Oil prices will be at their lowest in the first half of the year, it predicts, with a modest recovery in the second half as constrained supply and hopes of stronger demand in 2010 kick in.
But prices for Brent crude next year are expected to average only $50 a barrel – well below its peak of over $140 in June 2008.
The downturn in the automotive sector will also see lower demand for natural rubber. The EIU forecasts average price cuts of 44 per cent in 2009, despite a planned rubber cartel operated by Malaysia, Indonesia and Thailand.
Fibre prices will decline less steeply, partly because of reduce cotton plantings around the world. Prices will fall by an average of 10 per cent this year, with a recovery of 8.5 per cent in 2010.
At the same time, lower oil prices will make both synthetic rubber and manmade fibres, such as acrylic and polyester, more competitive.
The EIU will release its latest predictions for soft commodities, including food and feedstuffs, later this month, but expects prices to be less affected by the economic downturn.
Overall, the EIU is forecasting that its combined index of 24 hard and soft commodities will fall by 32 per cent in 2009.
