By  Paul Ploumis 09 Oct 2015  Last updated at  07:23:07 GMT

For Goldman Sachs Group Inc., copper and aluminum will continue to decline as a strong dollar, lower energy prices and China's deleveraging help drive down production costs. 

China's shift away from a metals-intensive, investment-led growth model will probably be permanent, damping consumption, and demand in the biggest user will likely continue to be hurt by a substantial overhang of debt and property inventory and further strength in the dollar, bank analysts Max Layton, Yubin Fu, Mikhail Sprogis and Jeff Currie wrote in a report dated October 8. 

Industrial metals prices have slumped 19 per cent on the London Metal Exchange this year amid the slowest Chinese expansion in a generation. The International Monetary Fund cut this week its forecast for global growth in 2015 to 3.1 per cent from 3.3 per cent estimated in July. 

"A multi-year strong dollar and emerging-market deleveraging environment has only just begun," the analysts wrote before the start of the annual LME week in London Oct. 12. "Together with the impact of the shale revolution in lowering energy prices, the strong dollar environment and China deleveraging are contributing to self-reinforcing cost deflation." 

Broadly Flat 

The bank expects zinc and nickel prices to be broadly flat from current levels, the analysts wrote in the report before Glencore Plc announced plans on Friday to cut zinc production by about a third by suspending or reducing output from mines in Australia, Peru and Kazakhstan. It lowered its price forecast for 2016 to $10,333 a metric ton for nickel from $14,500 and to $1,700 a ton for zinc from $2,383. Lead was cut to $1,650 a ton from $2,083. 

The biggest risk to the bank's bear case is that China's property market recovers earlier than it expects, the analysts said. 

Goldman reiterated earlier views that the copper bear market has years to run and sees a series of bearish catalysts around the turn of the year and into the first quarter, including a US interest rate increase, a stockpile build, lower oil prices and lack of a sufficient pickup in Chinese demand. 

The bank also repeated its view in a report published August 10 that aluminum producers face the longest period of pain in a generation with increasing global surpluses through 2018.

Courtesy : EconomicTimes