Moody’s Investors Service has lowered its price assumptions for base metals for the next couple of years, according to a report released on Friday.
The New York-based credit rating agency has cut its base price assumptions for gold, aluminum, copper, nickel, zinc, coal.
A variety of forces, including weak oil prices, slowing growth in China, overcapacity in global steel markets, and a strong U.S. dollar, are driving commodities prices close to the lows of the 2008-2009 financial crisis, the report says.
“Slowing growth in China, one of the largest global consumers of base metals, is a key driver in the lowering of our commodities price assumptions,” said Carol Cowan, senior vice president at Moody’s, in a statement. “But the weak economy in Europe, negative GDP growth in major economies such as Brazil and slowing US growth were also contributing factors.”
A stronger U.S. dollar will also increase the cost of metal purchases, which could cause demand, and subsequently prices, to decline, the report says.
Global macro and industry-specific conditions will remain challenging in 2016, but that production cutbacks and a better balance between supply and demand will lead to modest improvement in 2017, the report concludes.