Macquarie expects copper and oil prices to improve next year

Demand forecasts were continuing to come down on the back of slower global growth and weaker industrial production.

That meant supply cuts would be needed in alnmost every commodity to close the balance, "particularly given the growing risks to 2016 demand forecasts from ex-China emerging markets," analysts at Macquarie said in a research note sent to clients.

Indeed, the problem since the financial crisis had been the absence of such cuts, the broker continued.

"In a world of cheap money, not only is it cheaper to fund new capacity, but it is also easier to keep existing marginal assets going. Essentially, we have not let conventional economics work in this cycle," the research team led by Colin Hamilton said.

In fact, that overcapacity was feeding on itself, hurting emerging market economies and thus depressing demand further. Hence, a 'circuit-breaker' was needed, the Australian broker explained.

As companies reassessed their long-term plans and financial markets became more demanding, Hamilton´s team expected to see an "acceleration in the rate of idling of existing assets".

However, some commodities - such as copper - might be set to outpeform their peers in the short-term, given Chinese economic support measures.

The analysts penciled in a recovery in the average price of copper to $5,500 per metric tonne in the last quarter of 2015 from $5,290 over the previous three months. Their forecast for 2016 was for a recovery to $5,713 per metric tonne.

Healthy demand growth and a rapid natural decline rate could also see oil move through the cycle faster than its commodity peers.

Brent futures were seen averaging $58 per barrel in 2016 versus $56 in the year before.

In turn, "oil price recovery, albeit a likely 2017 event, will help all commodity markets through the return of cost inflation."

Markets such as uranium, with their China-imposed price floors, might also "not be a bad place to be".

Others, such as urea, steel and aluminium, were best avoided, given China was set to export its overcapacity of refined products for the foreseeable future.

Falling Chinese demand expectations would "disproportionally" hurt potash, natural rubber and thermal coal into 2016, the broker concluded.