Global base metals prices will not change materially over the next 12 to 18 months and could face further downside risk, as prices remain on a downward trend, says ratings agency Moody’s.

Our outlook for the global base metals industry is negative, which means that fundamental business conditions will worsen, it noted in its 2016 Global Base Metals Outlook report on Monday.

It added that slowing growth rates in China and Brazil, continued sluggishness in Europe, and a weak recovery in the US would contribute to a more muted demand picture and, importantly, less optimism about the pace of future growth.

Moody’s further pointed out that the weakening macroeconomic growth indicators and negative investor sentiment would continue to weigh on base metals industry fundamentals in 2016.

Cost curves have moved lower, but the steeper price decline will hurt earnings performance for the industry. The ability to cut capital expenditure and further reduce controllable costs will mitigate, but not offset, the pain, it stated.

However, the ratings agency highlighted that it could change its outlook for the industry to stable if purchasing managers’ indexes in Europe, China and the US – the key consuming regions – tracked between 50 and 55 for at least two consecutive months, and if Moody’s global macro outlook was for gross domestic product growth of between 3% and 4%.

A positive outlook would require PMIs in the US, Europe and China exceeding 55 for at least three consecutive months, and for Moody’s global macro outlook for GDP growth to be greater than 4%, it added.

• [Editor:Juan]