With iron ore prices falling to near two-year lows on Thursday, the National Australia Bank (ASX:NAB) has updated its forecasts for commodity prices for the next year and beyond. Apart from gold, the outlook is particularly bleak, especially for iron ore and coking coal companies.

October iron ore futures fell to just over US$90 a tonne on the SGX platform on Thursday, marking an 11% decline in the past week and a 10% drop in the first four trading sessions of September.

The September price, which is now the spot month, was trading at just over US$91 a tonne.

The decline followed a brief rebound above US$100 a tonne in late August. Weak data from China and continuing weakness in the pricing of key products like rebar and coil are contributing to the malaise, along with stock levels at major ports reaching 22-month highs.

In its updated commodity outlook, NAB stated, "At a high level, we see the downward trend for commodity prices continuing."

"Global economic conditions remain broadly unfavorable for commodity demand. China—the largest consumer of most commodities—continues to exhibit weak domestic demand, and an increasing number of countries are imposing trade measures in response to its export surge."

In US dollar terms, NAB reported that its Non-rural Commodity Price Index fell by approximately 7.0% quarter-on-quarter in the three months to June. The bank forecasts a further near 55% drop in the current third quarter, "led by iron ore and metallurgical coal."

"We have revised a number of commodity forecasts this month, with a weaker outlook for oil and base metals, but a stronger one for gold. NAB's Non-rural Commodity Price Index is forecast to fall by 10.9% in 2024 and a further 13.7% in 2025, led by coal and iron ore."

With our terms of trade down 3.8% in 2023-24, NAB's forecasts suggest a much larger fall over the next year to 18 months.

NAB's price forecasts for iron ore and coking coal are higher than current SGX prices. The spot price for iron ore is around US$91, and for premium coking coal, it is around US$198.50 for September and approximately US$193 a tonne for December (the front month).

NAB's current spot price forecasts are US$100 a tonne for iron ore and US$235 a tonne for coking coal.

NAB predicts significant weakening in the latter half of calendar 2025, with iron ore prices in the September and December quarters of that year forecast to be US$85 and US$84 a tonne, respectively. Coking coal prices are forecast to be US$190 a tonne.

Oil prices were also downgraded in light of recent declines. NAB estimates that Brent crude, the global benchmark, will average US$82.70 in 2024 and US$80 a barrel in 2025. The most recent price was between US$72 and US$73 a barrel.

NAB is somewhat more optimistic about gold. "Given that gold has remained well above our previous price forecasts, we have revised our outlook. We expect gold to average US$2,315 per ounce in 2024 and edge only marginally lower to US$2,290 per ounce in 2025," NAB stated.

The spot price on Thursday was around US$2,495 for September and US$2,525 for December, which is currently the main contract.