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.
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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.
Goldman believes China's shift away from metals-intensive investment is probably permanent.
The bank was most bearish on , forecasting the price would fall by 14 percent over the next 12 months to $4,000 a ton, down from its previous forecast of $4,500 a ton.
"Overall we now see global copper demand growth slowing to 0.5 percent in 2016, well below trend of around 2.5 percent p.a., and below our prior forecast of almost 2 percent," it said.
At the same time, Goldman expects copper's surplus supply to increase and does not expect the market for the metal to return to balance until 2020.
Goldman put aluminum prices at $1,350 a ton on a 12-month view, down from a previous forecast for $1,550 a ton.
"The aluminum market continues to, in our view, face the greatest bearish fundamental shock in a generation, and perhaps, in its history," Goldman said. "Demand growth is well below trend, and supply – especially Chinese supply – has been resilient despite falling prices."
It remained bearish on aluminum over the next 12-24 months largely because Chinese producers were making solid cash margins even at current prices and were unlikely to curtail capacity sufficiently to balance the market over that period.
Goldman was also bearish on gold on the back of expectations of higher real U.S. interest rates through 2016 and 2017. It forecast Comex gold at $1,000 an ounce by the end of this year.
But the bank was more positive on zinc, forecasting 7 percent upside on a three-month view to $1,800 a ton, although it cut its 12-month view to $1,700 a ton from $1,800.
"Zinc is the only base metal with the prospect for deficits over the next 12-months, owing to mine supply depletions and curtailments," Goldman said. "We expect zinc to significantly outperform other metals prices, with zinc smelters set to go through a period of margin deterioration."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1