The bank noted that its GS China Metals Consumption Index, which is based on physical output data for commodity-consuming components of China's industrial production sector, remained in sharply negative territory year-on-year, similar to the index's performance during the 2008-09 Global Financial Crisis.
Goldman doesn't believe recent supply cuts to copper and aluminum will be sufficient to offset declining demand.
With copper, for example, despite an earlier slowdown in supply growth, output from previous investment will come on-stream just as cuts in consumption bite. Goldman forecasts copper prices will fall to $4,800 a ton by the end of this year and $4,500 a ton by end-2016 on headwinds from China, which accounts for nearly half of global copper demand. On the London Metal Exchange, copper futures were trading around $4,836 a ton on Friday.
"While recent supply cuts in copper and aluminum may appear to bring the markets closer to balance, the cuts in our view are not sufficient to do so, given they were driven by demand weakness in the first place," it said. "Indeed, it is our view that the supply cuts confirm the bear case for these metals."