Material Matters: Commodities In 2026

Commodities | 11:00 AM

A glance through the latest expert views and predictions about commodities: 2026 outlooks for oil & gas, base metals, minerals and gold.

By Greg Peel

Oil & Gas

For 2026, ING commodity analysts remain bearish towards energy markets, with the global oil market set to be in large surplus following OPEC-Plus rapidly ramping up output as it shifts policy, while demand growth remains modest.

There is plenty of uncertainty about Russian oil supply following US sanctions, but as we move through 2026, markets are expected to get a clearer picture of the full impact.

For now, ING believes the impact will be limited in the medium to long term. However, there is potential for greater volatility, given OPEC's spare production capacity has shrunk as the group has increased output.

While there are some short-term upside risks for the European gas market, it's set to become better supplied, ING notes, despite the region’s plans to phase out Russian gas and LNG.

The start-up of LNG export capacity, particularly from the US, will leave global LNG markets and the European gas market increasingly more comfortable. Though the ramp-up of US LNG exports risks leaving the US gas market tighter.

Developments related to Russia-Ukraine peace talks will also be important to watch in 2026, with any progress towards ending the war likely to put further pressure on energy markets, ING points out.

Metals

China’s November commodity demand metrics showed further deterioration, UBS notes. Retail sales significantly underperformed expectations, marking the weakest result in three years, while the downturn in the property sector worsened.

Sustained weakness from here may present downside risks to demand expectations and prices, especially given economic decision-makers in China may delay policy until the 15th Five-Year Plan is finalised in March 2026.

Retail sales were weaker, rising 1.3% year on year versus 2.9% prior, well short of 2.9% consensus, on a combination of 1) fading consumer subsidies, 2) weak demand for durable goods, and 3) ongoing property market weakness reducing wealth and confidence.

When paired with further weakness in Industrial Production (up 4.8% year on year versus 4.9% prior), China's consumption prospects seem muted.

The slowdown has weighed significantly on investor sentiment for base metals, particularly in light of the emphasis placed on boosting domestic demand during the recent 4th Plenum.

With internal consumption increasingly fragile, UBS sees significant near-term macro risks for industrial metals. Downside could present should economic trends continue, while upside could emerge should China meaningfully stimulate.

UBS believes any stimulus is likely reserved for 2026, aligning with commencement of the 15th Five-Year Plan.

ING nonetheless believes most base metals are likely to remain well supported next year. Uncertainty over US refined copper tariffs will likely continue to see strong refined copper flows to the US, tightening up the ex-US market.

This coincides with a persistently tight copper concentrate market.

For aluminium, the market is focused on China approaching its production cap, along with several producers elsewhere considering closures due to high power prices. ING believes the aluminium market will be tight in 2026.

For nickel, ING expects little change amid persistent surpluses, keeping prices under pressure.

UBS notes Chinese EV output remained stable in November at 17% year on year growth. UBS believes battery raw materials demand will accelerate, especially given strength in EVs and a forecast surge in battery energy storage system (BESS) demand.

Minerals

China's property weakness accelerated in November, UBS notes, with housing starts down -21% year on year and sales down -9%, and the real estate climate index again down.

Crude steel output in October was down -11% year on year while iron ore port inventories are up 4% month on month.

While iron ore prices have recently been well supported on a range of factors, the ramp-up of Rio Tinto’s ((RIO)) Simandou mine, steel production in China's north likely to be managed through the winter, and China steel export licensing to take effect on January 1, UBS believes iron ore pricing could come under pressure into early 2026.

China's 6% month on month rise in coal production and imports in November, alongside stable coke production, likely reflects a thermal-led demand push, driven by power demand rather than steel-making requirements, UBS suggests.

Flat month on month coke production and slowing daily steel output underscore subdued blast furnace activity, consistent with ongoing weakness in property and construction.

This divergence implies coal supply is increasing without a corresponding uplift in steel demand, and together with expectations for increased supply in the first half of 2026, UBS remains cautious the met coal outlook.

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