MACQUARIE: ‘We no longer think commodity fundamentals are getting worse’

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Courtesy of Macquarie Research, here are the bank’s updated price forecasts for base and precious metals, along with those for bulk commodities.


In what is likely to be perceived as good news after a prolonged period of underperformance, Macquarie believes that the fundamental factors that drove prices lower over the past five years are no longer getting worse with supply growth negative for most of the commodities they cover and demand expectations shifting higher.

“2016 will mark a more commodity-intensive phase of growth and as a result we have made more price forecast increases than decreases,” says Macquarie.

However, while the bank is more upbeat on the outlook for commodity prices in general, it’s clear from the chart below that it expects prices in most markets to stabilise at low levels, rather than fall further.


The white box indicates where Macquarie believes each market currently sits in the commodity price cycle, with the black arrow indicating where it expects prices will move over a two year horizon.

While there are a few exceptions to the rule, prices in most markets are seen stabilising over the next two years.

For Australia, prices for iron ore, coal and LNG, the nation’s largest goods exports by dollar value, are expected to remain steady to lower over the same period.