China, India raised global demand for metals and energy

Demand from China, and to a lesser extent India, significantly raised global demand for metals and energy especially coal and less so for food commodities, according to a World Bank report. In its latest quarterly Commodity Markets Outlook report, the World Bank said energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down four percent). However, the Bank expects energy prices to average 39 percent below 2014 levels.

Natural gas prices are projected to decline across all three main markets US, Europe and Asia and coal prices to fall 17 percent, the report said. According to the report, China's consumption of metals and coal surged to roughly 50 percent of world consumption, and India's to a more modest three percent for metals, and nine percent for coal. "These patterns reflect different growth models and commodity consumption patterns in the two countries," it said.

If the two countries catch up to OECD levels of per capita commodity consumption, or if India's growth shifts towards industry, demand for metals, oil, and coal could remain strong.In contrast, given that the level of per capita consumption of food in China and India is already comparable with the world, pressures on food commodity prices are likely to ease as their population growth one of the key determinants of food commodity demand slows, it said. "China and India have played a significant role in driving global consumption of industrial commodities especially since the early 2000s. Going forward, while demand from India is likely to be a major factor in shaping consumption of industrial commodities, China will be important in driving global demand for energy given its efforts in rebalancing growth," said Ayhan Kose, Director of the World Bank Development Prospects Group.