Nov. 20 (Bloomberg) -- Global commodity demand will have a steady recovery in the first half next year, with China leading consumption, according to Macquarie Securities Group.

China, the world’s largest consumer of metals, accounted for about 50 percent of global commodity demand this year, up from about a third a year ago, analyst Jim Lennon said today at a conference in Hong Kong. Oil prices may reach $80 a barrel next year, oil economist Jan Stuart said at the same conference.

Metal prices have rallied 81 percent this year in London on Chinese purchases, and as a weaker dollar and expectations that the world is poised to recover from its worst recession since World War II stoked demand. Investors raised holdings in commodities to the highest levels in at least three years, BOfA Merrill Lynch Global Research said this week.

“The leap in demand for commodities in China this year has been quite staggering,” Lennon said. “You can see where these commodities are going by the increase in production in China of goods like autos.”

Steel production in China this year may jump to 570 million metric tons, up from about 500 million tons last year, Lennon said. Macquarie’s forecast compares with the 565 million tons predicted by the China Iron & Steel Association yesterday.

Challenging Markets

Macquarie’s comments comes after Merrill Lynch Wealth Management Group said that commodity markets may be “more challenging” next year as governments curb stimulus spending and interest rates rise. Governments worldwide have spent at least $12 trillion on their economies.

Still, demand from emerging markets should mean higher prices for commodities such as copper and gold, Bill O’Neill, a portfolio strategist at Merrill, said yesterday.

Demand in China has been boosted by the government’s $586 billion stimulus package which should continue until the middle of next year, said Macquarie’s Lennon.

“Demand may ease off a little bit in the second half, but we’re still looking at very strong growth,” he said.

Profits for the Chinese steel industry will likely triple on average next year on improved demand, Everbright Securities analyst Hu Hao said today in Beijing at a conference. The key driver will be the property sector, Hu said.

Oil prices may fall to about $60 a barrel in this and next quarter on weak demand from developed countries and growing inventories, Macquarie’s Stuart said today.

Crude Oil

Prices will rise to an average of $80 a barrel in the latter part of next year as the world economy strengthens, Stuart said. Crude futures rose 0.5 percent to $77.88 a barrel at 12:34 p.m Singapore time.

The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year and predicted a further acceleration in 2011 as China powers a global recovery, the Paris-based organization said in a report yesterday.

The economy of the group’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the report said.

To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

Last Updated: November 19, 2009 23:54 EST