Base metals have been the second-weakest commodities sector so far this year after energy sources, as measured against the S&P GSCI sub-indices on a spot basis, Commerzbank said Friday.
In total, base metals -- copper, aluminium, lead, zinc, nickel and tin -- are down around 26% in 2015.
"Lead performed 'best', shedding 'only' 13% since the beginning of the year. Down by a whopping 43%, nickel posted the worst performance," the bank said.
"In our opinion, metal prices have become detached from the fundamental data and have priced in a 'hard landing' of the Chinese economy, though we do not believe this will actually materialize.
"The supply-demand situation on many metal markets will tighten noticeably next year as many producers are no longer able to cover their costs at the current prices," it added.
Morgan Stanley echoed the analysis. "The ongoing decline in commodity prices this year has seen cuts in metal processing capacity and mining capability worldwide. We estimate that the total reported cuts for metal and bulk commodity market are 3-10% of their respective supply rates for 2015."
But Morgan Stanley was not bullish on the supply-side response. "Cuts alone are insufficient to spark a sustainable lift in prices. For that, we need a recovery in demand growth."
The key has been increasingly bearish signals out of the world's biggest commodities consuming nation, China. The government said this week GDP growth there is likely to be around 6.8% in 2016.
Commerzbank said the low price environment will result in "extensive production cuts, some of which have already been announced. The biggest cuts announced so far have concerned zinc, with more than 10% of global supply set to be withdrawn from the market. We expect metal prices to embark on a recovery movement next year."
That view was not shared by all.
"Most have already written next year off and are looking at 2017," one dealer said.
A senior banking source agreed, saying he expected a poor year in 2016.
