The global commodities market is entering 2025 with a mix of uncertainty and opportunity. In 2024, many investors were disappointed by weaker-than-expected demand, particularly from China. An oversupply of key materials like crude oil, steel, and wheat further pressured prices. However, not all commodities struggled—gold stood out as a bright spot, thanks to strong central bank purchases and shifting macroeconomic conditions.
As we look ahead, several key factors like OPEC+ oil supply will shape commodity markets in 2025, some sectors will continue to battle oversupply and weak demand, and others—like natural gas and gold—are set for a strong year.
With central banks adjusting interest rates, governments responding to energy security concerns, and supply chains evolving, understanding these key commodity trends is more crucial than ever.
According to the Oxford economy, there are the five key commodity trends to watch for in 2025
1. OPEC+ Faces a Supply Dilemma, But Output Will Rise
After a year of weak demand and price pressures, OPEC+ is at a crossroads. The group delayed production increases in late 2024 as crude oil prices remained under pressure, primarily due to sluggish global demand and an oversupply from non-OPEC producers. In 2025, the dilemma will be whether to maintain production cuts to support prices or increase supply and risk further price declines.
With U.S. oil production growth slowing, OPEC+ is expected to start increasing supply cautiously. However, weak demand in China and the rising adoption of electric vehicles in developed markets could keep oil prices subdued. Brent crude could see further declines if market sentiment does not improve, making oil one of the most uncertain commodities to watch next year.
2. Natural Gas Poised for a Boom Year
While natural gas prices remained low in 2024 due to strong production and high storage levels, 2025 could be a turning point. The expiration of the Russia-Ukraine pipeline deal at the end of 2024 introduces new supply risks for Europe, increasing demand for liquefied natural gas (LNG) imports. The U.S. will be a key supplier, with new LNG export capacity from the Gulf of Mexico coming online.
Additionally, growing industrial demand in the U.S. and rising pipeline exports to Mexico will further support prices. With geopolitical uncertainties and a shifting global energy mix, natural gas is set to be one of the best-performing commodities in 2025.
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3. Steel Overcapacity Will Worsen
Steel prices struggled in 2024 due to oversupply and sluggish demand, and this trend is expected to continue into 2025. China’s steel-intensive property sector remains weak, and domestic demand is unlikely to recover meaningfully. While Chinese steel production has declined, it has not been enough to offset the market imbalance, leading to an increase in steel exports.
Emerging markets, particularly in Asia, are being flooded with cheap Chinese steel, causing oversupply concerns even in regions with tariffs. Moreover, new steel production capacity is set to come online globally over the next two years, exacerbating the issue. While central banks in advanced economies are cutting rates, which could eventually stimulate manufacturing demand, it will take time for these effects to materialise, keeping steel prices under pressure in the first half of 2025.
4. Gold Will Continue to Shine
Gold was a standout performer in 2024 and is expected to continue its strong momentum in 2025. With the U.S. Federal Reserve cutting interest rates in late 2024, lower yields have boosted demand for gold as an investment hedge. Falling rates reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors.
Additionally, central banks, particularly in emerging markets, have been aggressively buying gold to diversify their reserves away from the U.S. dollar. China, the largest buyer, has purchased over 180 tonnes in the past two years. While gold prices may experience temporary consolidation, the overall fundamentals remain strong. Continued demand from central banks and lower U.S. Treasury yields will likely push gold prices higher, making it one of the top-performing assets in 2025.
5. Grain Prices Will Find a Bottom and Stabilise
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Due to abundant supply, agricultural commodities experienced a sharp price decline in 2024. While prices are starting to stabilise, they remain below previous years’ highs. Strong harvests, particularly in Brazil, have impacted key grain markets, including soybeans, maize, and wheat. The soybean stocks-to-use ratio for 2024/25 is at its highest level in 17 years, reflecting a supply glut.
However, some factors suggest that prices may stabilise or even rise slightly in 2025. Rising fertiliser costs could support grain prices by increasing production costs. Maize and wheat prices are expected to rebound modestly but will remain below the peaks seen between 2021 and 2023. Meanwhile, rice prices, which had been elevated due to Indian export restrictions, have plunged following policy changes, and they are expected to decline further in 2025.
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