CICC 2026 Commodity Outlook: Gold Continues to Rise, Non-ferrous Metals Reach New Heights

The U.S. tariff policy in 2025 is accelerating the reshaping of the global trade pattern, leading to a reconstruction of global industrial division and macro order, which may significantly increase asset volatility and economic outlook uncertainty. The commodity market is also undergoing changes, facing not only challenges from insufficient growth momentum in traditional demand but also opportunities arising from geopolitical games and industry innovations. Since the second half of this year, the commodity market has gradually emerged from the quagmire of pessimistic consensus expectations, with trading focus returning to their respective fundamentals, such as oil supply risks, gold as a safe haven and profit-taking, as well as expectations of copper shortages. Looking ahead to 2026, we believe that geopolitical games, resource security demands, and emerging demand growth may become a trio after the global commodity market enters a new chapter of order.

Summary

First, geopolitical games and resource protectionism may bring more challenges to the already fragile supply elasticity. The downturn cycle of global upstream investment in energy and metals has lasted nearly a decade, and the lack of capital expenditure has formed constraints on supply elasticity, specifically manifested in unstable stock supply and insufficient incremental supply. Amid the reconstruction of order, macro uncertainties such as geopolitical risks and resource protectionism may systematically rise, further challenging the already fragile supply elasticity of energy and metal markets. At the same time, the intertwining of trade friction risks and weather cycle variables adds more uncertainty to the expectations of abundant agricultural products globally.

Second, strategic security is receiving more attention from the demand side, and energy transition and reserve construction may still be the trend. As traditional economies increasingly focus on security, the endogenous growth momentum of global commodity demand is insufficient, leading to intensified competition for the distribution of existing demand. We believe this not only indicates that energy transition remains a trend but also signifies that reserve construction is still imperative, which may bring additional demand for green transition metals, biofuel raw materials, and strategic commodity resources such as crude oil and gold.

Finally, from AI investment in traditional economies to industrialization in emerging economies, new demand may be building up. Looking ahead to next year, the reconstruction of order continues, and the macro environment may face many uncertainties, making it difficult for demand headwinds to dissipate. However, emerging demand is also gaining momentum. On one hand, the narrative of AI is gaining traction; in addition to the direct demand from data centers for raw materials like copper, we believe that the continuous improvement of global electrification levels may bring more sustained increases in commodity demand. On the other hand, the reshaping of trade patterns and industrial division may provide more support for the industrialization of emerging economies, with demand increases already reflected in the resilience of China's intermediate goods exports, represented by steel. In the long term, the strong demand intensity for commodities in India and "Belt and Road" countries may still be the driving force for the next round of commodity supercycle.

Main Text

Commodity Outlook 2026: A Trio of New Order

The U.S. tariff policy in 2025 is accelerating the reshaping of the global trade pattern, leading to a reconstruction of global industrial division and macro order, which may significantly increase asset volatility and economic outlook uncertainty. The commodity market is also undergoing changes, facing not only challenges from insufficient growth momentum in traditional demand but also opportunities arising from geopolitical games and industry innovations. In fact, since the second half of this year, the commodity market has initially emerged from the quagmire of pessimistic consensus expectations under tariff shocks, with price fluctuations of various commodities returning to fundamentals, and the internal correlation of the market significantly decreasing, aligning with our judgment in the mid-term outlook report "The Changing Situation After Consensus Expectations" published in June In summary, the marginal changes in the commodity fundamentals since the second half of the year mainly occur in the following three aspects:

► First, demand resilience is better than expected. In addition to the continued favorable trend of green transformation benefiting downstream demand for non-ferrous metals and agricultural products, under de-globalization, the demands for resource reserve construction and industrial division of labor transfer have also begun to provide regional demand highlights for energy, precious metals, and black metals.

► Second, cost feedback is being realized. For example, the domestic anti-involution policies that led to the mid-year rebound of black metals, as well as the production cuts in North American shale oil that provide bottom support for crude oil prices, are both marginal resistances that cannot be linearly extrapolated from macro-consensus expectations.

► Third, supply risks are resurfacing. Whether it is the conflict in the Middle East or disturbances in Indonesian copper mines, we believe that the occasional risk events on the supply side are actually the dual inevitable results of insufficient upstream investment in the industry and intensified macro geopolitical games.

Chart 1: The uncertainty of the global economic policy environment has increased this year

Source: IMF, China International Capital Corporation Research Department

Chart 2: Commodity prices have shown significant improvement in the second half of the year

Source: Bloomberg, China International Capital Corporation Research Department

Chart 3: The correlation index of commodity prices in the second half of 2025 has shifted downward

Note: Based on the rolling correlation coefficients calculated from the price changes of 20 major commodities, including energy, black metals, non-ferrous metals, and agricultural products.

Source: Bloomberg, China International Capital Corporation Research Department

Looking ahead to 2026, challenges from trade frictions, geopolitical games, and industrial restructuring to the endogenous growth momentum of the traditional economy may be difficult to end. The commodity market may continue to face headwinds from the high uncertainty of the macro environment, and trading opportunities may need to continue to be sought in the fundamental and micro differences of varieties. We believe that geopolitical games, resource security demands, and emerging demand growth may become the trio for the commodity market as it enters a new chapter of order Geopolitical Games and Resource Protectionism May Bring More Challenges to Supply Elasticity

The downturn cycle of global upstream investment in energy and metals has lasted nearly 10 years. Although commodity prices rebounded after 2020, significantly improving the operating cash flow of upstream companies, the effective conversion efficiency to capital expenditure has further declined. Under the impact of U.S. tariffs, the uncertainty of the global macro environment is rising in 2025, and we suggest that economic outlook pressures may further suppress the investment willingness of upstream companies. In the first half of this year, we have already observed a preliminary decline in capital expenditures of major global oil and gas upstream companies and metal mining enterprises compared to 2024 levels.

The lack of capital expenditure may have formed constraints on supply elasticity, specifically manifested in unstable existing supply and insufficient incremental supply. Taking copper and oil as examples. In the copper market, insufficient upstream investment intensity has led to copper mine capacity consistently falling short of expectations, which is influenced by both the high interference rate of copper mines since 2016 and the declining grade of existing mines, as well as the constraints of insufficient new capacity, especially the lack of large project reserves (see "Copper: Demand Shock Does Not Change Supply Narrative"). In the oil market, the acceleration of mature oil field depletion corresponding to the downturn cycle of oil and gas investment since 2015 may soon arrive, coupled with the possibility that 2025 may be the peak year for non-OPEC+ new projects, we believe that the turning point for non-OPEC+ crude oil production from offense to defense may be imminent (see "Oil: The Change of Offense and Defense for Non-OPEC").

Chart 4: Average Total Cost and Average Grade of Global Copper Mining Companies

Source: Bloomberg, S&P, CICC Research Department

Chart 5: ICSG 2025 Annual Future Copper Mine Project Forecast

Source: ICSG, CICC Research Department

Chart 6: Global Mature Oil Fields May Accelerate Depletion in the Next 10 Years


Source: IEA, China International Capital Corporation Research Department

Chart 7: 2025 may be the peak year for new non-OPEC oil project capacity

Source: IEA, China International Capital Corporation Research Department

The risk of macroeconomic games may constitute a third dimension of supply factors, and the challenge to supply elasticity may be one of the investment main lines worth paying attention to in the commodity market. In addition to traditional time and space dimension factors such as investment cycles and geographical distribution, we believe that during the process of reconstructing the macro order, geopolitical risks and resource protectionism may systematically rise, and the disturbances to energy and metal supply sides may become increasingly significant. Furthermore, the impact of trade frictions on agricultural product supply patterns may intertwine with weather cycles, and the risks implied in the expectations of bumper harvests may also be accumulating.

Chart 8: Geopolitical games and resource protectionism may bring more challenges to the stability of commodity supply

Source: China International Capital Corporation Research Department

The impact of supply disturbances on spot balance may further manifest in 2026. In the copper market, there is theoretically about 713,000 tons of new investment and ramp-up project supply increment next year, bringing about a 3.1% increase in output. However, considering disruptive events, we expect the actual incremental copper supply that can be realized in 2026 to drop to 343,000 tons, with a growth rate of only 1.5%. Under the rebalancing of mining and metallurgy, we expect that in 2026, the global refined copper supply growth rate will converge towards the mining supply growth rate, with a year-on-year growth rate of 1.9%. Looking ahead, we expect the gradually expanding benchmark supply gap in copper mines to call for more price mechanisms to intervene, and the copper price center may need to maintain above USD 10,500-11,000 per ton to stimulate the production of copper mines outside the baseline scenario (see "Record High Copper Prices vs. Insufficient Copper Mines Response").

In the oil market, as OPEC+ increases production and the "buffer" runs low, there may be a chance for the geopolitical supply risk premium to return, coupled with the shift from offensive to defensive expansion of non-OPEC+, we believe that the oil market may be expected to emerge from hibernation in 2026, with opportunities for a trend breakthrough towards the long-term cost guidance range in the second half of the year. In addition, if geopolitical changes lead to supply shocks first, or if unexpected impacts affect OPEC+'s production increase decisions or actions, we also suggest that there may be opportunities for an upward revaluation of the oil price center (see "Oil: The Shift from Offensive to Defensive for Non-OPEC") Chart 9: Future unmet copper demand may continue to expand

Source: CRU, China International Capital Corporation Research Department

Chart 10: CRU copper incentive price

Source: CRU, China International Capital Corporation Research Department

Chart 11: Global oil market quarterly supply-demand balance and forecast

Source: IEA, China International Capital Corporation Research Department

Chart 12: Required oil price for major oil project investment breakeven

Source: IEA, China International Capital Corporation Research Department

In addition, in the agricultural products market, the intensification of trade disputes combined with weather cycle turning points prompts us to pay attention to potential risks in the expectation of bumper harvests. This year, global trade frictions have increased the risk of supply-demand mismatch in agricultural products, with the soybean market becoming more reliant on South American supplies. The weather conditions during this winter's crop growing season may be quite important. In recent years, the global agricultural product fundamentals have mostly been in a state of continuous surplus, so the market's sensitivity to weather risks is not high; we believe an important reason behind this may be the frequent solar activity over the past three years, resulting in favorable water and heat conditions. However, looking ahead, we warn that the number of solar sunspots globally may likely enter a downward channel in the next 3-5 years, and the probability of the La Niña phenomenon may increase. Historically, in La Niña years, crops in southern Argentina and Brazil are prone to yield reductions due to drought conditions We remind that the variability of weather cycles may bring unexpected volatility risks to global agricultural product prices.

Chart 13: Global Sunspot Cycle and Anomalous Weather Retrospective

Source: NOAA, Royal Observatory of Belgium, CICC Research Department

Chart 14: Deviation of Soybean Yield from Historical Trends and Anomalous Weather Cycles

Source: USDA, NOAA, CICC Research Department

Strategic security is receiving more attention, energy transition and reserve construction are the trends of the times

During the process of order reconstruction, traditional economies are increasingly focusing on security as growth, and the global demand for bulk commodities lacks endogenous growth momentum. Therefore, the competition for the distribution of global stock demand may intensify. We believe this not only means that energy transition remains a trend of the times but also indicates that reserve construction is imperative, both of which are expected to provide demand resilience for strategic commodity resources and are two investment themes worth paying attention to in the commodity market.

On one hand, new investments in the energy system continue to flow towards green transition. According to the IEA, since 2021, the scale of global energy system investment has begun a new round of expansion. While traditional energy investments remain cautious, the green transition sectors represented by renewable energy, power grids, energy storage, end-use electrification applications, and energy conservation in the electricity sector have become the main destinations for investment increments, reflecting that the energy transition is steadily advancing.

Chart 15: Expansion of Global Energy System Investment Since 2021

Source: IEA, CICC Research Department

Chart 16: Incremental Investment Mainly Goes to New Energy Sectors

![](https://mmbiz-qpic.wscn.net/sz_mmbiz_png/fzHRVN3sYs9CtWibUpV1Jss3P8uC6fmemKiadCr4X0DYYbu3eR1dJdpzZcnJhm3piaPGMyZsjnDvUib5JMquX6lCnA/640? Data Source: IEA, China International Capital Corporation Research Department

In the commodity market, non-ferrous metals such as copper and aluminum may benefit first from the energy transition. As the demand for green transformation shifts from quantitative change to qualitative change, it may have largely offset the adverse effects brought by traditional demand from the domestic real estate cycle in the copper and aluminum markets. We expect that by 2030, the share of green demand in global copper demand may increase from 17% in 2025 to 24%, and the share in aluminum demand may rise from 15% to 25%.

In addition, the biofuel policies of various countries overseas are expected to accelerate in 2025, potentially becoming a new opportunity for global oilseed demand growth. Countries such as Indonesia, Malaysia, the United States, and Brazil are promoting the development of biofuels by raising blending ratios, clarifying long-term goals, and improving subsidy mechanisms, which may open up industrial consumption growth space for palm oil, soybean oil, and other oils. We expect that by 2030, the share of industrial demand in U.S. soybean oil consumption may increase from 50% in 2025 to 60%.

On the other hand, under the trend of de-globalization, the demand for regional resource reserve construction may provide demand resilience for strategic commodities. We believe the most representative examples are the crude oil replenishment demand from non-OECD countries and the gold purchasing demand from emerging country central banks. Since the second quarter of this year, a surplus in the global oil market's spot supply has formed, but the accumulation pressure on OECD commercial crude oil inventories linked to market pricing has not met expectations. According to the IEA, the replenishment demand from non-OECD countries may have absorbed some of the supply surplus, alleviating the accumulation pressure for OECD countries. We believe this reflects a higher demand for resource security from non-OECD countries amid trade frictions and macro uncertainties. The global central banks' increased demand for gold reserves may also be similar; for risk hedging and diversification considerations, the amount of gold purchased by global central banks rose from 500 tons/year to 1000 tons/year after the Russia-Ukraine conflict in 2022. According to the WGC, global central bank gold purchases from Q1 to Q3 2025 reached 634 tons, exceeding the average level of about 56% from 2011 to 2019.

Chart 17: Increase in Non-OECD Crude Oil Inventories in 1H25, Absorbing Spot Supply Surplus

Data Source: IEA, China International Capital Corporation Research Department

Chart 18: Increase in Global Central Bank Gold Purchasing Demand After 2022


Source: WGC, China International Capital Corporation Research Department

From AI Investment to Industrialization of Emerging Economies, New Demand May Be Gaining Momentum

The restructuring of order is raising macroeconomic uncertainty, bringing headwinds to the traditional demand growth for commodities. Looking ahead to next year, the adverse effects of global trade frictions on economic growth may still be yet to manifest, and the supply shocks brought by U.S. tariffs and immigration policies may inevitably weigh on U.S. economic growth. The IMF predicts that the global GDP real year-on-year growth rate may further decline from this year's 3.16% to 3.09%. Our calculations suggest that this corresponds to a historically low level of around 0.9% year-on-year growth in global oil demand. Domestically, the real estate cycle may continue to seek stabilization, and the internal circulation still awaits policy intensification to further unlock. We believe that the traditional commodity demand, represented by black commodities, may continue to remain weak.

In addition to traditional demand, emerging demand is also gaining momentum and is expected to become the third investment theme worth paying attention to in the commodity market. On one hand, the narrative of AI is gaining traction, providing growth drivers for commodity demand in traditional economies. With the exponential increase in AI computing power demand, in addition to the direct demand for raw materials from data centers, we believe that the continuous improvement in global electrification levels is likely to bring more sustained incremental physical consumption of related commodities. According to BNEF, the annual copper consumption from newly built data centers globally from 2025 to 2035 is expected to be around 400,000 tons. We believe that the growth trend of investment in new and upgraded power grids in the coming years is still relatively strong: the CICC Power Group expects that the CAGR of investment in China's power grid projects from 2024 to 2026 is likely to reach around 10%, while the CICC International Group expects that the investment in distribution networks in the U.S. and Europe from 2024 to 2030 is likely to reach 12% and 8%, respectively, driven by the demand for grid updates and reinforcements under the growth of electricity load.

In addition, the acceleration of electrification in the U.S. is also expected to bring medium- to long-term opportunities for natural gas power generation demand. According to Global Energy Monitor, the newly developed gas power generation capacity in the U.S. from 2025 to 2030 totals 66GW, which we estimate could bring a cumulative growth space of 5.3 BCF/D for electricity gas consumption, accounting for about 15% of the U.S. electricity gas consumption scale in 2025. If we further consider the implied undeveloped capacity from gas turbine orders, the new gas power generation capacity in the U.S. from 2025 to 2030 may approach 130GW, potentially bringing a cumulative growth space of 10 BCF/D for electricity gas demand. In terms of timing, the new capacity may begin to accelerate release from 2027. If the new capacity progresses as expected, we believe that electricity gas consumption may be poised to follow LNG exports as the next growth driver for U.S. natural gas demand.

Chart 19: Forecast of Copper Demand Increment from Data Centers


Data source: Bloomberg, China International Capital Corporation Research Department

Chart 20: Forecast of the increase in gas demand for electricity corresponding to the new gas production capacity in the United States

Data source: Global Energy Monitor, EIA, China International Capital Corporation Research Department

On the other hand, the reshaping of trade patterns and industrial division of labor may provide momentum for the industrialization and urbanization processes of emerging economies. Looking back at history, the four "super cycles" of commodities from 1900 to the present have been accompanied by the urbanization and industrialization processes of economies such as Europe, the United States, Japan, and China. We believe that the demand intensity for most commodities is still in an upward channel, with India and countries along the "Belt and Road" being potential forces for the next round of commodity super cycles, currently still in a phase of accumulation. The U.S. tariffs in 2025 may become an accelerator for the reshaping of global trade patterns and industrial division of labor, providing new support for the industrialization processes of these emerging economies.

Since the beginning of this year, the marginal boost in commodity demand due to the transfer of industrial chains may have been initially reflected in the resilience of intermediate goods exports represented by steel in China. From January to September 2025, China's intermediate goods trade accumulated a year-on-year increase of +10.3%, higher than capital goods at 7.1% and consumer goods at -2.4%. Compared to the same period last year, the proportion of intermediate goods in China's export trade increased from 43.9% to 45.6%. In terms of export destinations, the increase mainly went to emerging markets, including Thailand, Saudi Arabia, Vietnam, India, and the Philippines, while exports of intermediate goods to developed countries such as the United States, the Netherlands, South Korea, and Japan decreased. Specifically in the commodity market, China's steel, benefiting from low costs and economies of scale, exported a total of 87.96 million tons from January to September, an increase of 9.2% year-on-year, and we believe this export resilience is likely to continue.

Ranking of Commodity Internal Sectors and Core Outlook for 2026

Looking ahead to 2026, although macroeconomic growth still faces high uncertainty, on a micro level, as the impact of supply disturbances becomes evident and local demand changes are underway, we expect that the majority of surplus patterns in the commodity market may marginally improve, and there is no need to be overly pessimistic about the performance of the commodity market.

Chart 21: The majority of surplus patterns in the commodity market may marginally improve in 2026

![](https://mmbiz-qpic.wscn.net/sz_mmbiz_png/fzHRVN3sYs9CtWibUpV1Jss3P8uC6fmemqNEozYwX9TIRDaf2fCOHkF0NwialuU5ibxcuCPyKeGglHYdicywk27HvA/640? Data source: IEA, CRU, USDA, EIA, National Bureau of Statistics, General Administration of Customs, CICC Research Department

In terms of the internal ranking of commodities, based on three investment themes, we believe that non-ferrous metals and precious metals are likely to become the first tier of upward trends next year. Among them, the supply side of copper faces both long-term capital expenditure constraints and short-term unexpected disturbances, while the demand side benefits from the continuation of the green transition trend and new highlights from AI narratives. The shortage pattern may shift from expectation to reality starting next year, and the price upcycle may open up; the supply constraints for aluminum remain strong, which may continue to support high profits in the electrolytic aluminum segment; gold may benefit from the demand for reserve building under de-globalization and market allocation needs during the Federal Reserve's interest rate cut cycle, with the price center likely to continue to rise.

Crude oil and agricultural products are in the second tier. After significant price declines, cost feedback may provide bottom support, and supply risks and demand growth may bring rebound opportunities. Among them, OPEC+ is increasing production, and the oversupply of spot oil in the market remains the baseline scenario. Non-OECD stockpiling demand and geopolitical supply risks may create opportunities for expected differences; at the same time, the cost challenges of North American shale oil have already begun. We expect the non-OPEC supply expansion cycle may reach a medium to long-term turning point in the second half of next year, potentially providing a trend breakthrough opportunity for the oil price center. Overseas prices of soybeans, corn, and others have already fallen below cost lines, and trade disputes and weather variables may add uncertainty to the supply side; overseas biofuel policy intensification may also provide new growth opportunities for palm oil and soybean oil demand.

Finally, we maintain a cautious attitude towards the black series, which is the third tier. Among them, the demand from downstream manufacturing related to the black series is supported by exports, but real estate and infrastructure demand may still not have bottomed out, and domestic demand may face marginal slowdown pressure; coupled with the production and ramp-up of iron ore projects such as Ximangdu, the supply curve expansion of smelting raw materials may further loosen, potentially driving the iron ore price center to continue to decline.

Energy: Looking for clues in the supply cycle

The global oil market is expected to shift from tight balance to surplus by 2025. Although this process is accompanied by macro emotional disturbances from U.S. tariff policies and global trade frictions, returning to the micro fundamentals, we believe the core driver of the market structure change is the adjustment and shift of power on the supply side. With the curtain rising on "Trump 2.0," the reconstruction of the global order is accelerating, and the initial impact on the oil market may be an increase in geopolitical weight in OPEC+ production decisions, as evidenced by this year's OPEC+ willingness to initiate a production increase cycle at the cost of fiscal revenue loss, leading to a shift of the "oil coin" towards surplus.

Looking ahead to 2026, we believe the deeper impacts of order reconstruction on both the supply and demand sides of oil may further emerge. First, due to OPEC+ providing a production increase buffer, the oil market's pricing of supply risk premiums has remained cautious this year. However, in fact, from the conflict in Iraq to sanctions against Russia, and then to the emerging risks in South America, the factors of supply instability have actually increased rather than decreased, which may also be an inevitable result of order reconstruction. Looking forward, considering that OPEC+'s remaining production capacity is no longer sufficient, the exit from the collective production reduction plan may not be smooth sailing, and the pause in production increases in Q1 2026 may already be showing signs We suggest that the decline in OPEC+'s production increase buffer in 2026 may bring opportunities for a return of supply risk premiums. Secondly, the drop in oil prices this year has triggered cost challenges for North American shale oil, indicating that the turning point for non-OPEC+ aggression may be approaching. Looking ahead to next year, the restructuring of order may continue to elevate macroeconomic uncertainty and suppress upstream investment willingness in oil and gas. We expect that the dual cyclical pressure of reduced new production projects and accelerated depletion of mature oil fields may further manifest, and the shift of non-OPEC+ crude oil supply from offense to defense may officially arrive in the second half of 2026. Finally, although global trade frictions and order restructuring may continue to pressure economic growth and oil consumption in demand countries, we believe there is no need to be overly pessimistic about global oil demand, highlighting two new supports for demand resilience: first, the endogenous demand growth in emerging economies may benefit from the reshaping of industrial division. Excluding China and India, we estimate that oil demand in other non-OECD countries may maintain a year-on-year expansion rate of 500,000 to 600,000 barrels per day over the next two years, accounting for about 60% of the global year-on-year increment. On the other hand, strategic security may receive more attention from stock economies, and the demand for reserve construction in non-OECD countries may still be a major trend.

Based on the above analysis, we believe we can be more optimistic about the oil market and oil price performance in 2026. If this year's oil price equilibrium position seeks support from supply costs and premium volatility opportunities under a surplus pattern, then the oil market in 2026 may be poised to emerge from dormancy and welcome opportunities for a breakthrough towards the long-term cost guidance range. In the baseline scenario, we expect global oil supply surplus pressure to be concentrated in the first half of 2026, during which Brent oil prices may continue to hover between $60 and $70 per barrel, with trading opportunities likely remaining in the risk premium reassessment after overselling. In the second half of the year, the marginal turning point of OPEC+ and non-OPEC+ supply may resonate, which not only means that the pressure of spot supply surplus may significantly ease, but more importantly, oil prices may welcome opportunities for a breakthrough towards the long-term cost guidance range ($70-$80 per barrel). In a risk scenario, if geopolitical changes lead to supply shocks first, or if unexpected factors affect OPEC+'s production increase decisions or actions, we suggest that there may also be opportunities for an upward reassessment of the oil price center.

Regarding natural gas, the global LNG supply expansion wave may officially arrive next year. The commissioning of LNG liquefaction projects in the United States and Qatar may lead the supply increment. For the U.S. natural gas market, this year's LNG export expansion supports the elevation of gas price centers, and a cold winter may raise the risk of price increases during the peak season, which has not been fully accounted for in the forward curve. Looking ahead to next year, with continued investment in liquefaction capacity, U.S. LNG exports may maintain high growth, coupled with the slowdown in associated gas production increase, which may be unavoidable, and the recovery of major production areas may require higher gas price stimulation. We expect NYMEX natural gas price fluctuations to rise to $4-$5 per million British thermal units next year, which basically aligns with the current forward curve's expected path.

For the European natural gas market, this winter's inventory preparation is not sufficient, and the risk of price increases during the peak season is high. Looking ahead to next year, the replenishment task may still be heavy, coupled with a possible proactive reduction in reliance on Russian LNG, Europe may need to further increase imports of U.S. LNG Next year, the price of gas required for the investment break-even of major LNG new projects in the United States is expected to be between $9 and $10 per million British thermal units, which may provide some guidance for the central price of gas in Eurasia next year. Looking further ahead, the investment cost of the liquefaction project in Qatar, which will be launched in the second half of next year, is only $6 to $7 per million British thermal units. We suggest that there may be further downward pressure on Eurasian LNG spot prices in 2027-28. Based on the current forward curve, we believe that the market's pricing for the risk of rising Dutch TTF gas prices this winter and the downward space for the next two years is insufficient.

In terms of thermal coal, the anti-involution measures suppress supply elasticity, and a cold winter across the year may support demand. Looking ahead, during the 14th Five-Year Plan period, the output of thermal power in China may enter a "peak zone," and the supply growth rate is also expected to peak, leading to a relatively balanced overall supply and demand. We expect that the supply-demand balance may loosen first and then tighten next year.

Ferrous Metals: Restructuring Supply and Demand

We remain relatively cautious about the performance of ferrous metals next year. The decline rate of domestic steel production and demand in the "post-real estate" era is slower than expected, which is due to the evolution of the steel demand structure, with manufacturing steel offsetting construction materials and exports offsetting domestic demand. However, the pressure on steel production capacity remains significant, and it still does not hold an advantage in profit distribution. Looking ahead, steel exports and indirect exports will continue to benefit from China's new model of external circulation, which involves exporting capital goods and intermediate goods to Belt and Road countries. However, it is also necessary to pay attention to China's exports replacing overseas steel production, which in turn affects raw material demand. We remain relatively cautious about domestic demand, as manufacturing investment may face downward pressure, and real estate and infrastructure investment may still not have bottomed out. From the material side, the diversion of molten iron from non-construction steel may continue, with differentiation between plates and long products likely to persist—hot-rolled products with high output, high demand, and high inventory determine the price ceiling, while rebar with low output, low demand, and low inventory determines the price floor. On the raw material side, with the production and ramp-up of iron ore projects such as West Mangdu, the supply curve expansion of smelting raw materials may continue to ease, leading to a decline in the overall price center. The increase in coking coal supply mainly depends on the speed of infrastructure expansion in Mongolia.

Non-Ferrous Metals: Moving Up a Level

There are constant disturbances in the copper mine sector, and the transformation demand continues to drive consumption growth. The gap in the copper market is no longer just an expectation; it has begun to materialize—driven by the surge in electrification demand combined with the low-speed supply of copper mines. The price center of copper has been steadily rising over the past few years, and the copper market is likely to continue to maintain a shortage/tight balance in the next two years. Considering the reflexivity of the market, we have been paying attention to changes and responses on the supply side. Currently, there are still relatively few large copper mine projects in the pipeline before 2028, and existing projects also face concerns about declining grades, aging facilities, and rising operational risks.

In the long run, the rebound in capital expenditure for copper mines is also not significant. Therefore, we believe that the market is still unprepared for the approaching gap, which may essentially be due to insufficient price incentives. The intervention of price mechanisms (price increases) seems to be the only way to stimulate more supply or demand substitution (such as aluminum) to balance the forward copper market. We expect that the price center of copper needs to be maintained above $10,500 to $11,000 per ton in the long term to stimulate copper mine production beyond the baseline scenario. This is the core logic behind our continued optimism about medium- to long-term copper prices even after copper prices hit a historical high in the fourth quarter of 2025. Looking ahead to next year, in terms of rhythm, the new wave of upward movement may have to wait for the favorable momentum of the traditional manufacturing cycle, with the first half of the year likely to be more volatile, and opportunities may arise in the second half of 2026 In terms of electrolytic aluminum, it will benefit from the electrification opportunities and the demand for aluminum as a substitute for copper due to rising copper prices. From a profit perspective, it will also benefit from the domestic capacity ceiling and the slow release of overseas capacity. We expect that the release of capacity in Indonesia will still be slow in 2026, and supply constraints will continue to support electrolytic aluminum prices. Alumina and bauxite may remain loose, and there is potential for further expansion of profits in the electrolytic aluminum segment.

In terms of lithium carbonate, the demand for energy storage may be relatively strong, but overall it is still in a supply release cycle, and supply elasticity may suppress prices, making it difficult to break above 75,000 yuan.

Agricultural Products: Gradually Diminishing Surplus, Slowly Rising

We believe that trade policies, weather risks, and bioenergy may become the three main lines of trading in the global agricultural market next year. Overall, after two years of turbulence and bottoming out, the agricultural product cycle has established a bottom. The negative feedback from supply due to falling below planting cost lines may gradually emerge, while the demand side may regain growth with the onset of the global interest rate cut cycle. Under the reshaping of fundamentals and balance, the destocking cycle of agricultural products may restart, with internal ranking: grains > oils > soft commodities, live pigs.

In terms of grains, the supply side of new season U.S. soybeans has tightened, and the increase in biofuels supports high crushing volumes. The policy expectations between China and the U.S. are positive, and the recovery of U.S. soybean exports may lead to a significant decrease in the inventory-to-consumption ratio. We believe that the expected difference brought by tariff variables may become the key to trading in the first quarter of next year, with U.S. futures prices fluctuating strongly in the range of 1000-1250 cents/bushel. The new season U.S. corn is expected to have a bumper harvest, and supply pressure may have been fully priced in. The export progress of U.S. corn is the fastest in nearly three years, providing significant support to the market. In the first half of 2026, South American corn production may face uncertainties against the backdrop of a contraction in Brazil, with global demand shifting to South America, and adverse weather disturbances still existing, which may test Brazil's supply. In addition, the corn-soybean price ratio is relatively high, and we expect that the spring planting in the U.S. in 2026 may reduce the planting area of U.S. corn. Under the expectation of a shrinking inventory-to-consumption ratio, this may benefit forward prices, with a range of 400-480 cents/bushel.

In terms of oils, the promotion of biofuel policies in various countries has accelerated, which may become an important driving force for the global oilseed bull market. The continuous increase in biodiesel blending targets in Indonesia and Malaysia has driven the continuous increase in palm oil consumption. The U.S. EPA has also significantly raised the total volume of biofuel blending and the blending obligation for biomass diesel for 2026, injecting incremental demand into soybean oil consumption. Brazil's CNPE has also raised the blending ratio of biodiesel to 15%. However, from an economic perspective, governments are also implementing various tools to bridge the cost gap of biofuels, and policy changes have become one of the biggest uncertainties in the oilseed market.

In terms of soft commodities, the loose fundamental pattern continues, with ongoing supply recovery and relatively weak global economic growth, leading to insufficient demand support, which is the main factor suppressing prices. However, with the onset of the macro interest rate cut cycle, there may be marginal improvements in consumption expectations, and prices may show signs of stabilizing after falling.

In terms of domestic live pigs, since the second half of 2025, the de-capacity of live pigs has been relatively slow, but recent policies have once again emphasized the implementation of measures to control live pig production capacity. We believe that the fourth quarter of 2025 to the first quarter of 2026 is a critical period for capacity de-capacity. If the targets are strictly enforced, the breeding sow inventory may begin to decline significantly and trend down to around 39 million heads. According to a transmission cycle of about 10 months, the decline in market hog slaughter volume may gradually materialize in the third quarter of 2026, and the supply-demand pattern will also significantly improve Range: 10.8-15 CNY/kg.

Precious Metals: Resonance of Structural and Cyclical Opportunities

In 2025, the U.S. tariff policy will break the global macro stability, and gold will benefit from the certainty premium in an uncertain environment, leading the commodity market with a cumulative increase of up to 50% in COMEX gold prices. From a fundamental perspective, as global central banks continue to purchase gold, the inflow of funds into global gold ETFs, primarily driven by the North American market, may be the core incremental source of gold investment demand this year. Therefore, we believe that this year's breakthrough in gold prices may result from the resonance of structural demand and cyclical opportunities.

Looking ahead to next year, we believe that gold is likely to continue its upward trend, with structural and cyclical opportunities expected to resonate further. On one hand, the trend of de-globalization and strategic security demands may continue to provide medium- to long-term support for emerging market central banks to increase their gold reserves. We note that the new changes in 2025 or the escalation of trade frictions may raise higher requirements for the construction of physical gold inventories in regional markets, which may have already begun to show signs in the tightening liquidity of the gold market that has frequently occurred this year. On the other hand, the pressure on U.S. economic growth may continue to manifest in the first half of next year. The Federal Reserve has restarted interest rate cuts in September this year and may end balance sheet reduction by the end of the year. The liquidity easing cycle may continue, and the switch to a recovery trade may also require some time, compounded by geopolitical risks in the process of order reconstruction that may not completely dissipate. These cyclical factors are also expected to support investment demand for gold ETFs and others.

Authors: Guo Zhaohui, Li Linhui, Source: CICC Insights, Original Title: "CICC 2026 Outlook | Commodities: A Trio of New Chapters in Order"

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