Commodity Market Prices, Data, and Analysis

Crude oil prices remained volatile throughout the year, fluctuating as markets balanced concerns about near-term oversupply with geopolitical risks stemming from tensions in the Russian Black Sea and ongoing peace negotiations between Ukraine and Russia. The petrochemical markets faced persistent weakness due to structural global overcapacity and weak downstream demand, resulting in downward price trends for ethylene, aromatics, and polymers. Polymer-grade propylene reached significant lows amid high inventory levels, while polyolefins and specialty polymers experienced consistent price declines across global benchmarks. Additionally, trade tensions between the US and China, along with sanctions on Russian producers, further pressured energy markets. This prompted shifts in refinery economics as producers adjusted their output strategies to capture better margins.

Agricultural markets also experienced considerable volatility, especially in corn, as trade tensions affected import levels. This led to reduced demand due to strong domestic crop production and ample stocks. Animal diseases had a significant impact on poultry production and prices, although some sectors managed to recover from earlier declines.

Overall, across all commodity sectors, macroeconomic headwinds, including trade policy uncertainty, concerns about consumer confidence, and inflationary pressures, created sustained bearish conditions, particularly in Europe. Industry consolidation was anticipated as companies sought to restore balance between oversupply and weak downstream demand.

Key macro trends shaping commodity markets

• Structural Overcapacity & Weak Demand
• Energy transition
• Food security
• Tariff changes
• Supply chain fragmentation
• Geopolitical conflicts
• Consumer confidence
• Inflation
• Interest rates
• Wars
• Currency pressures
• Energy Economics Reshaping Production
• Sector-Specific Dynamics
• Structural Market Shifts
• Technological advancements
• Evolving consumer behaviour
• Environmental factors

Commodity prices are showing divergent movements across sectors. Energy prices have weakened amid the Russia-Ukraine peace negotiations, while jet fuel prices strengthened due to seasonal demand before easing. European natural gas prices rose due to cooler weather and maintenance disruptions in Norway before moderating.

Industrial commodities are performing better, with iron ore strengthening due to robust winter restocking demand, paraxylene rebounding on the strength of crude oil, and Capesize freight rates rising in response to increased Pacific tonnage demand.

Agricultural and chemical commodities face headwinds from oversupply. Sugar is under pressure from an expected global surplus, coffee declined due to US tariff exemptions, wheat remains weak under currency pressures, and propylene faces weak downstream demand. The divergence reflects structural supply-demand imbalances and the market's adjustment following easing geopolitical risk premiums.