Metals prices may find some support after their long downturn, as China's raw-materials dependent sectors begin to show some modest improvement, Goldman Sachs said.
"China's 'old economy' continued to stabilize during late 2015 (albeit at very weak levels, and well below trend growth rates)," Goldman said in a note dated Sunday, citing an uptick in the latest reading of its in-house GS China Metals Consumption Index (MCI).
"The pick-up likely reflected a reduction in de-stocking and targeted fiscal easing (most notably in the automotive sector), and sustained acceleration in credit (albeit ongoing since May)," it said.
Goldman added that the market has largely priced in weakness in Chinese demand into metals prices near term after a substantial increase in net short positions over the past three months. A short position is a bet on the price of an asset to fall.
That means that as long as the surge in oil supply doesn't overrun storage capacity and China doesn't substantially devalue its currency -- neither of which Goldman expects -- the GS China MCI stabilization, seasonal improvement in metals demand after the Lunar New Year holiday and the Chinese government's stockpiling could temporarily support metals prices near term, the bank said.
Metals prices have certainly come off a tough year. In 2015, aluminum slid 11 percent, was down 24 percent, nickel dropped 42 percent, and precious-metal-with-industrial-uses platinum fell 26 percent.
The segment faces twin problems from a supply glut and a dramatic slowdown in demand, particularly in China.
But Goldman's call comes with some caveats, particularly that its reading of the GS China MCI is preliminary as the full breakdown of Chinese industrial data for November and December hasn't been released yet.
Goldman also only expects a temporary fillip and it's remaining "structurally bearish" over the longer term.
"China is likely to continue to slow credit growth over the medium to long term given credit growth is still running at roughly double the rate of gross domestic product (GDP) growth," the bank said. "This, together with a dollar bull environment, is set to disproportionately impact commodity-intensive fixed-asset investment (FAI) in manufacturing and property, with self-reinforcing negative feedback on producer currencies and commodity cost support."
China's economic growth is certainly slowing: In 2015, GDP growth slowed to a 25-year low of 6.9 percent , as the world's second-largest economy continues to shift away from its manufacturing roots.
Others also aren't too keen on the prospects for metals and mining in general.
On Friday, Moody's put 55 mining and metals companies on review for downgrades to their credit ratings.
"Slowing growth in China, which consumes and produces at least half of base metals, and is a material player in the precious metals, iron ore and metallurgical coal markets is weakening demand for these commodities and driving prices to multi-year lows," says Carol Cowan, a Moody's Senior Vice President. "China's outsized influence on the commodities market, coupled with the need for significant recalibration of supply to bring the industry back into balance indicates that this is not a normal cyclical downturn, but a fundamental shift that will place an unprecedented level of stress on mining companies."
The companies placed under review include major players Vale, Barrick Gold, Alcoa and Rio Tinto.
-Alex Rosenberg contributed to this article
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1