Copper and zinc lost a quarter of their value in 2015 while nickel fell by more than 40 percent as slowing growth in top consumer China, a supply overhang and a strong dollar hammered industrial metals. Worries about tighter supplies to come capped lead's losses at 4 percent. Aluminium fell 19 percent, and tin ceded 24 percent on concern about market surpluses.
A rising US currency makes dollar-denominated commodities more expensive for non-US buyers. Investors are hoping the worst is over for base metals. But some fund managers and analysts expect further losses in 2016 before miners make significant output cuts to offset slowing demand growth. "We've come a long way, but 2016 will probably be another lost year for commodities, though we should see a bottom," said Christoph Eibl, chief executive of Tiberius Asset Management.
"The supply overhang needs to be corrected, which will be painful because that means giving up market share and restructuring. I think this will happen next year." Benchmark copper on the London Metal Exchange ended 2015 at $4,705 per tonne, falling 0.6 percent on Thursday. Last month copper hit a 6-1/2 year low of $4,443.50. US COMEX copper prices settled at $2.135 per lb, down a quarter from last year. Three-month aluminium fell 1.4 percent to $1,506 a tonne on Thursday, zinc was down 1.4 percent at $1,609, lead rose 0.8 percent to $1,793 and tin slipped 0.7 percent to $14,550.
Much of the focus in 2016 will remain on China, the world's largest consumer of industrial metals, particularly on its industrial production data, which has a strong correlation with demand for metals. "It's tough to imagine sentiment sinking much further, but the market still looks very well supplied," an analyst at a commodity trader said. Goldman Sachs in a recent report forecast copper at $4,500 at the end of 2016. "We continue to see the risks surrounding our end-2016 forecast as skewed to the downside, with the main risks being Chinese demand and cost deflation." Nickel gained 1.3 percent, at $8,810 a tonne, on Thursday. But nickel's losses this year highlight the metal's reliance on China and its stainless steel mills. Stocks of nickel in LME-approved warehouses at 441,294 tonnes are up more than 10 percent since December 8.