Material Matters: Beware Commodity Shocks, Copper Speculation & Mining Services

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A glance through the latest expert views and predictions about commodities: possible commodity shock risks; speculation driving the copper price; downside risk among mining services companies.

• The Potential For Commodities Shocks
• Copper’s Speculative Momentum
• A Shift In The Commodities Cycle

By Greg Peel

The Potential For Commodities Shocks

Commodities markets are in an era in which geopolitical, climate and technological shocks routinely overwhelm traditional supply-demand analysis, Citi notes.

Rather than considering simply what is most likely, Citi’s view is investors need to consider what is plausible, and what markets are least prepared for.

The frequency of major commodities market disruptions appears to be rising. Citi highlights that since the early 2000s, markets have navigated everything from the GFC to the US shale revolution, covid, the Russia-Ukraine conflict, Trump’s trade wars, climate change, and repeated Middle East conflicts, amongst other shocks.

To that end, Citi offers up nine potential “wildcards” for commodities beginning in the second half of 2026.

• The US-Iran conflict goes from temporary shock to multi-year disruption of Gulf oil production capacity, transit through the Strait of Hormuz and Bab El Mandeb (Red Sea), driving crude oil to US$150/bbl and beyond, wholesale refined products to US$200/bbl and beyond, and US retail gasoline to a sustained US$6/gal (currently just over US$4/gal).

• Russia-Ukraine escalation drives renewed oil and gas export restrictions – likely even more bullish for global gas than for oil.

• Critical minerals hoarding goes into overdrive, driving copper to US$20,000k/t and more (currently around US$13,900/t).

• Gold falls another -15-20% near-term, before doubling.

• Super el nino and other extreme weather drive agricultural price spikes.

• The AI boom becomes a bust, driving electricity, natural gas, uranium, and power infrastructure metals like copper and aluminium one way (down), and gold the other way (up).

• Trump’s trade war hits US farmers again, and the US-China trade war resumes, hitting US agricultural exports.

• By 2030, the global LNG glut worsens on Russia’s Siberia 2 gas pipeline to China, driving LNG prices down.

• The US blockades all Americas oil exports, driving global oil prices to well above US$100/bbl, while US benchmarks (eg West Texas Intermediate) might be discounted by over -US$30/bbl.

Copper’s Speculative Momentum

Canaccord Genuity notes the June quarter 2026 was a quarter of shifting sentiments, as financial markets began to move past the implications of the US-Iran war and “animal spirits” returned ahead of the SpaceX IPO on June 12.

Concerns around stagflation eased as oil prices declined, and the AI narrative reignited investor interest. Post-June 12, however, we saw a marked reversal of sentiment as markets went into “risk-off” mode and concerns around excessive AI infrastructure spending re-emerged.

Industrial metals as a group outperformed precious metals, which saw significant declines over the quarter.

Copper prices have remained relatively robust, even as the physical market remains relatively tepid and surplus exchange inventories remain near two-decade highs.

Canaccord attributes the price support to speculation that the US Administration might have imposed import tariffs by a June 30 deadline, which has passed with no comment or decisions either way.

(Canaccord’s report was published on July 20. From July 24, Trump has imposed 10% or 12.5% “forced labour” tariffs on more than 80 countries, although tariffs separate to the original Liberation Day tariffs the US Supreme Court deemed illegal had previously been placed on the likes of steel and aluminium.)

Canaccord believes the tariff ambiguity is serving to maintain a speculative element in copper pricing, along with a still-strong narrative around data centre construction.

However, over the last month, shares in the copper producers in the broker’s coverage universe have declined by -13% as a group even as the copper price has remained relatively range-bound.

Given Canaccord’s view that the copper price is being propped up by speculative fund flows, a turn in sentiment from any of several variables could weigh on the price.

Near-term macro overhangs Canaccord is watching for include the broader AI trade (of which copper has been a proxy), the flare-up in tensions in the Gulf and the pending US mid-term elections in November.

In terms of actual demand, Canaccord does see green shoots in China with year-over-year copper consumption increasing every month this year, import premiums rising, and semi-fabricator operating rates increasing back to historic levels.

While China’s property market remains in the doldrums, Canaccord notes pricing has begun to improve in Tier 1 and Tier 2 cities. 2025 marked the first time that copper consumption from sectors related to the energy transition surpassed demand from the property sector in China, and the current Five-Year Plan (2026-2030) calls for additional investment in these sectors.

Canaccord believes the return to pre-war base metal pricing over the June quarter is telling, in that the drivers behind recent commodity pricing strength are now structural in nature and, as such, we are well into a strong new metal pricing cycle.

Key drivers of the cycle include security of raw material supply, which is now front and centre for governments around the world, and the US-Iran war, which has clearly highlighted the dependence of global energy needs on a volatile strategic chokepoint, and has accelerated a move by countries, businesses, and consumers to more localised (typically green) energy sources.

Military spending is expected to accelerate even further as countries currently involved in conflict re-arm, Europe looks ahead to a NATO that may not include the US, and other countries (particularly Asia ex-China) come to rely less on the US for military support.

Canaccord also highlights onshoring and re-industrialisation, which are poised to accelerate given global mandates to boost both economic growth and supply chain security, and data centre infrastructure demand and grid investment are poised to continue, and potentially even accelerate.

In terms of stock market investment to take advantage of the cycle, Canaccord particularly favours copper developers in this part of the cycle, and looks for names with attractive jurisdictions, a clear and defined pathway to production, and scale and economics that could attract larger companies.

A Shift In The Commodities Cycle

Elevated commodity pricing has driven a wave of investment across the mining industry, Jarden notes, flowing through to the commercial services businesses that support it, being ALS Ltd ((ALQ)) in minerals testing, Dyno Nobel ((DNL)) and Orica ((ORI)) in explosives, and Orica in specialty chemicals for minerals processing.

Jarden points out only recently has this activity translated into earnings and margin delivery, and share prices/PE multiples across the three have re-rated accordingly, with ALS equity now at historically stretched levels.

Jarden anticipates the commodities cycle may be undergoing a transition, from the “Early Stage” (dominated by exploration activity) to the “Peak Stage”, which is likely to benefit industrials with greater exposure to production activity (Dyno Nobel and Orica).

Using 20 years of financial disclosure from ALS, Jarden sees the typical “Trough to Peak” cycle for the commodities segment lasts around 30 months.

On an assessment of the trough this cycle being in the first half of 2024, Jarden warns a slowdown in activity (geochemistry sampling flow growth) is a significant downside risk for investors given what the broker assesses to be crowded positioning and a historically stretched relative valuation level.

Based on Jarden’s framework, Orica (87%) has the largest earnings exposure to commodities generally, compared with ALS Ltd (63%) and Dyno Nobel (61%), given their respectively diversified business mixes.

With some 30% of earnings exposure to exploration activity, Jarden sees ALS and Dyno Nobel as potentially most exposed to the shift in the commodities cycle into FY27.

Using consensus “Exploration Budget” and “Production Capacity” forecasts for the major gold and copper miners globally, Jarden can see an expected shift in activity away from exploration to production amongst this cohort across the forecast period to FY32.

Consensus estimates are nevertheless yet to meaningfully reflect a commodities cycle transition in ALS estimates, and Jarden sees this mismatch in expectations as an important consideration for investors to acknowledge at this point in the cycle, with an expected peak in the first half 2027. 

Jarden rates ALS a Sell, while Dyno Nobel is on Neutral and Orica on Buy.

We note that among the five brokers monitored by FNArena daily covering ALS, all have Buy or equivalent ratings.

Dyno Nobel scores one Buy and four Holds, while the more widely covered Orica lines up with seven Buy or equivalent ratings.

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