Concerns on the outlook for growth of the Chinese economy -- and its demand for commodities -- has led to persistent commodity price weakness for most of this year, with price forecasts for the sector seeing continuous downgrades.
The latest data from the LME released last week showed money managers have been cutting their net-long positions, or expectations that prices will rise, while U.S. investors have upped their net-short positions or bets on further price weakness in copper, according to head of commodities research at Capital Economics, Julian Jessop.
Renaissance Capital became the latest broker to cut its commodity price outlook on Monday, after it reduced its calendar year 2016 aluminium forecast as well as a number of other precious and industrial metals by 2016 to $1,600 per ton, which is still way above current levels of around $1,435.
Oil prices staged a recovery on Monday after the Saudi Arabian government, the largest oil producer within oil cartel OPEC, said they were ready to cooperate in maintaining stable markets.
U.S. West Texas Intermediate (WTI) crude futures were down 84 cents a barrel at $41.56 a barrel by 13: 30 London time, having fallen by more than 3 percent earlier on a stronger dollar.
"I see more danger of weakness in non-oil commodities. However, the foreign exchange market effect will be broad-brush as the dollar benefits and commodity-sensitive currencies are under pressure again across the board," said global macro strategist at Societe Generale, Kit Juckes in a note to clients published on Monday.