Commodities Update November 2025
Commodities were steady in October, with gains in coal, oil, aluminium, and copper offset by declines in gold and iron ore. Forecast changes are minimal but gold is lower near-term while the correction in oil and iron has been delayed. Elevated Chinese port inventories, and subdued pig iron output, suggests robust demand from coastal mills and/or unreported “dark ore” may be supporting iron ore prices.
The following is based on text from the November Market Outlook (PDF 4MB)
For more details of our longer-term forecasts see November Commodites Forecast
Commodity prices were broadly flat through October, masking notable strength in some commodities. Metallurgical coal, crude oil, and aluminium each posted solid gains of around 5%, while copper rose a more modest 2%. These advances were offset by declines in gold (down 3%) and iron ore (down 1%), resulting in minimal net movement across the broader commodity complex. Consequently, changes to our forecasts this month are limited, with the Westpac Export Price Index for December 2026 revised slightly to 328 from 330 in the September report. The key adjustments include a downgrade to our gold forecast, now US$4,180/oz, and a delay in the expected correction in crude oil, with the December 2026 estimate revised to US$58/bbl from US$65/bbl.
Gold rally runs out of steam, at least for now
While it is always difficult to pinpoint a top for gold, recent developments suggest we may have seen a near-term peak. After surging past US$4,000/oz earlier in October, gold has since eased, and we now expect prices to track sideways through to year-end, albeit within a volatile and wide range. A key factor reinforcing this view is the recent policy shift in China, where major banks suspended parts of their gold savings businesses following the introduction of new VAT rules on gold transactions. The changes, aimed at curbing short-term speculation and tightening oversight of the physical gold supply chain, are likely to dampen retail demand. Given the significant role Chinese ETFs and physical buying played in the recent rally, this development supports the notion that near-term demand has softened and the push higher has ended, at least for now. As such, we have marked down our gold price estimate for end 2026 to US$4,180/oz.
Correction in crude now in 2026
The anticipated shift toward excess crude oil supply, driven by rising production and softening demand, has yet to materialise as expected. While global output has increased by 4mbpd over the past six months, including a 2mbpd lift from OPEC+, demand growth has been subdued, averaging just under 1mbpd compared to last year. What has prevented this surplus from accumulating in inventories is China’s aggressive build-up of its Strategic Petroleum Reserve (SPR), which may have absorbed as much as 1mbpd since March. Estimates suggest China now holds between 1.2 and 1.3 billion barrels in strategic and commercial reserves.
Meanwhile, Russian crude held in floating storage has surged, with Bloomberg estimating volumes exceeding 380 million barrels. While the timing of China’s SPR slowdown and the potential release of Russian oil into the market remain uncertain, we assume that at the right price, these barrels will find buyers, posing a downside risk to prices. However, this is counterbalanced by ongoing Ukrainian drone strikes on Russian refineries, which have disrupted up to 20% of Russia’s refining capacity, and geopolitical uncertainty surrounding U.S. policy in Venezuela, where potential regime change efforts could further constrain supply.
Given these dynamics, we continue to see near-term upside risk to crude prices from potential supply shocks. As such, we have pushed back our forecast correction to crude oil and now expect prices to break below US$60/bbl in the second half of 2026. Accordingly, our December 2026 forecast is now US$58/bbl, down from US$65/bbl in the September report.
Are “dark ore” inventories supporting prices?
Iron ore prices drifted lower through October but have held up more robustly than anticipated. Reports indicate that Chinese steel mills are facing mounting losses, with steel prices falling below production costs. This has prompted several mills to announce maintenance plans for November, following aggressive production cuts in late October driven by environmental controls and blast furnace shutdowns.
At the same time, Chinese port inventories of iron ore have risen noticeably, climbing to around 135.6 million tonnes by the end of October and noticeably stronger than the current level of pig iron production. Steel and steel product inventories are also elevated, defying seasonal norms. Given the current volume of pig iron being produced (–1.7% year to date) and the supply of iron ore (Chinese ore production down 1.6% year to date, imports almost flat at –0.1%) suggests two possibilities we have observed before that would help explain the more robust that expected iron ore price:
The larger fall in domestic production vs. ore imports could point to a larger adjustment in steel production from the smaller inland mills that are often integrated with a local mines. As such the large coastal mills, that are more dependent on imported ore, adjust less and thus the demand for imported ore remains more robust.
The current level of port ore inventories looks to be relatively low given the rate of domestic ore production and imports compared to the rate of pig iron production suggesting the presence of “dark ore”; material that has entered the market but not accounted for in the official inventory data.
Adding to the supply outlook the Morébaya Port in Guinea, developed as part of the Simandou iron ore project, is set to be inaugurated on November 11, with first exports expected shortly thereafter. This marks the beginning of a significant new supply stream that should weigh on prices into 2026.
Given these dynamics, we continue to expect iron ore prices to weaken into year-end, though the pace of decline is now more moderate. Our December 2025 forecast has been revised to US$102/t, up from US$97/t in the September report.
Copper fundamentals continue to firm
Despite the recent surge in copper prices, we remain cautious on the near-term outlook. Inventories continue to climb at Comex and are trending higher in Shanghai.
With Chinese copper premiums declining and LME prices at record highs, we expect Chinese exports of refined copper to rise, capitalising on the arbitrage opportunity.
To help outline the medium term outlook we take a look at recent US trade policies as their impact is still unfolding. On 8 July, the US administration announced a 50% tariff on copper imports, effective 1 August 2025, citing national security concerns. This rate is double the previously anticipated 25%. Reports suggested the tariff may extend to semi-finished copper goods, adding uncertainty.
The market reaction saw COMEX 3-month copper surged 10% to US$5.53/lb (US$12,191/t) on the announcement while the COMEX-LME spread widened to ~US$2,500/t, reflecting strong US buying ahead of the tariff. US cathode imports (Jan–May) rose 130%yr, driving inventory build-up to around 500 kt by end-July (~30% of annual demand).
The goal of the tariffs was to stimulate domestic supply of copper, but we see this as being unlikely, at least for the near term, due to long lead times and structural limits in US smelting/refining capacity. As such, they present little risk for the medium term outlook where supply remains constrained.
At least for the near term, we expect to see inventory drawdowns in the US and a redirection of copper away from the US and a resulting easing in a relatively LME stock position.
These tariffs also represent an inflation risk for the US as higher input costs for manufacturers, especially if tariffs extend to semi-finished goods, could pressure construction, electrical infrastructure, and appliances prices higher.
The US accounts for a bit less than 7% of global refined copper demand, but the tariff has disrupted trade flows and tightened LME stocks position (down 60% year to date). As such we expect the relative price weakness on LME to be short-lived.
Aluminium on a uptrend
Aluminium remains volatile but continues to trend upward. The recent correction from above US$2,900/t mirrors previous pull backs at US$2,700/t and US$2,800/t, suggesting this dip may to prove to be temporary. We still see potential for a near-term high of US$3,000/t. In a local point of interest the Tasmanian government offered to extend the power supply for Rio Tinto’s Bell Bay smelter, easing concerns about its viability beyond 2026.
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