Commodity Markets Face Volatility Amid Global Economic Shifts

Global Commodity Markets Experience Volatility Amid Economic Shifts

As of May 31, 2025, global commodity markets are navigating a period of significant volatility, influenced by economic shifts, supply chain disruptions, and policy changes. Key developments across various commodities are shaping the current landscape.

World Bank Forecasts Decline in Commodity Prices

The World Bank’s latest Commodity Markets Outlook projects a substantial decline in global commodity prices over the next two years. Prices are expected to drop by 12% in 2025 and an additional 5% in 2026, returning to pre-COVID-19 levels observed from 2015 to 2019. This trend is attributed to weakening global growth and rising trade barriers. While the decline may help moderate near-term inflation, it poses challenges for developing economies reliant on commodity exports. Energy prices, including Brent crude oil and coal, are anticipated to decrease significantly due to ample supply and reduced demand, notably from increased electric vehicle use in China. Conversely, gold prices are projected to reach a new record in 2025 amid global uncertainty before stabilizing in 2026. Source

Commodity Traders Expand Influence Across Global Supply Chains

Leading commodity trading houses—Trafigura, Vitol, Gunvor, and Mercuria—have earned over $57 billion in net profits since the onset of the 2022 energy crisis. These firms are aggressively investing these gains to expand their influence across global supply chains. Investments include diversifying into assets such as power plants, petrol stations, and biofuels, while also strengthening core oil and metals trading operations. For instance, Vitol has expanded its asset base to own nearly 10,000 petrol stations and significant energy infrastructure across regions including the Mediterranean and Africa. These expansions aim to boost profitability through enhanced control over physical assets and information advantages, despite rising competition from hedge funds and other market entrants. Source

Archer-Daniels-Midland Focuses on Cost Controls Amid Challenges

Archer-Daniels-Midland (ADM) is focusing on cost control measures as the challenging commodities cycle, which has impacted its profits, is expected to persist into 2025. The global grains trader is contending with low crop prices, uncertainty around biofuels regulations, and potential disruptions due to a possible U.S.-China tariff battle. Additionally, federal investigations into accounting irregularities have further pressured ADM, causing a significant drop in its share price this year. CEO Juan Luciano noted that global trade adjustments might ultimately benefit the company, and ADM is preparing for potential shifts in trade flows. Source

Singapore Tightens Commodity Trading Practices

Singapore has taken a strong stance on misconduct in its commodity trading sector following multiple scandals during the COVID-19 pandemic. Measures include digitizing trade documentation and establishing a trade finance registry to prevent asset duplication. These efforts aim to rebuild credibility and stay competitive against rising hubs like Dubai. Banks are now more vigilant in lending, making it tougher for smaller traders to access financing, while Singapore reinforces its zero tolerance for fraud and strengthens regulatory compliance. Source

China’s Mixed Commodity Import Landscape

In 2024, China’s commodity import landscape was mixed, with record imports of iron ore, coal, and natural gas, but a decline in crude oil imports. Crude oil imports decreased by 2.1% to 553.42 million metric tons, influenced by high prices and a shift to New Energy Vehicles (NEVs). Diesel fuel market share is also decreasing due to trucks powered by liquefied natural gas (LNG). These trends reflect varied economic performance and structural changes within China’s economy. Source

Indonesia Considers Nickel Production Cuts

Indonesia, the world’s largest nickel producer, is contemplating reduced nickel ore production to boost prices, which have dropped 40% in the past two years due to oversupply. The government is reviewing mining quotas to stabilize prices, maintaining a careful balance due to its economic dependence on the nickel industry. Any aggressive cuts could impact tax revenues and the domestic economy. Analysts predict that Indonesia’s role will be crucial in achieving a balanced global nickel market in the coming years. Source

In summary, the global commodity markets are experiencing significant volatility due to a combination of economic shifts, policy changes, and supply chain disruptions. Stakeholders must navigate these challenges carefully to maintain stability and profitability in the evolving landscape.