Metals prices may have outperformed oil over the past 20 months, but that's unlikely to continue, with metals set to keep dropping while crude recovers, Goldman Sachs said.
"On the supply side, metals tend to have higher costs of closure, slower 'decline' rates, and near infinite storage capacity, prolonging supply-side adjustment relative to shale oil production which has lower costs of closure, higher decline rates, and finite storage," Goldman said in a note dated Monday.
Additionally, metals demand growth would likely stay subdued because the segment was more exposed to the slowdown in China's investment-driven "old economy," Goldman said.
"We now anticipate no material recovery in Chinese metals demand growth in 2016 (most notably in late construction cycle heavy copper), as China's metals and mining commodity demand is likely to continue to be challenged by a substantial debt and property inventory overhang," the bank said.
House building was not particularly sensitive to metals prices, so cheaper metals would not spur a new building boom, it added.