After a bounce in both oil and metal prices last week, some analysts predicted that the worst was over for the commodity rout sparked by fears of an economic slowdown in China.
Nonetheless, Goldman Sachs is maintaining its bearish take on the sector generally, as it argues fundamentals have not changed following the recent rally, but analysts at the bank are also suggesting that China's rebalancing also throws up some opportunities.
The biggest shift the group sees is a rising demand for "opex" commodities, or energy and consumption-based metals such as aluminium in China, while expecting a decline in demand for "capex" commodities such as steel, cement and iron ore.
"This should actually increase confidence in Chinese policymakers' ability to rotate growth away from investment and towards consumption," analysts led by Michael Hinds and Jeffrey Currie said in a note to clients published on Monday.
The group also give their price outlook for metals and oil across the energy sector:
Goldman still sees fundamental for the oil market remaining weak and views "the market to be strongly oversupplied."
"Prices have declined sharply over the past month to our previous $45 per barrel forecast. Part of this was precipitated by macroeconomic concerns but in our view, it was also warranted by weak fundamentals."
In line with its oversupplied outlook, Goldman has changed its 3, 6 and 12-month WTI forecasts to $42, $40 and $45 per barrel respectively. U.S. crude is currently trading around $49 per barrel.
Goldman continues to expect that copper prices will fall to $4,800 a ton by year-end, down from current levels of $5,344 on the London Metal Exchange.
"Of particular importance to copper has been weakness in China," the group noted.
"The ongoing weakness in demand has recently led to some major supply curtailments."
The aluminium market is arguably facing the "greatest bearish fundamental shock in a generation, and perhaps, in its history" as demand growth in China this year has been very disappointing.
They remain "resolutely bearish" on the outlook for the market, even from all-in price levels which are nearing 2003/04 levels.
Glencore's announcement to cut 500,000 tons of zinc production, which is roughly 3.5 percent of global supply should lead to a short-term rally, the group said,
"But beyond very near term zinc price strength, with the demand risks as they are (in our opinion heavily skewed to the downside), it is likely to be prudent to wait for a major tightening in zinc mine before becoming bullish on the refined zinc market"
Their current gold price forecasts remain $1,150 per troy ounce in 3 months, $1,100 in 6 months and $1,050 in 12 months. Gold was up around 0.8 percent at $1,166 on Monday.