Commodity Price Watch: October 2025

Industrial commodity prices in annual terms will be lower in 2026 than any year since 2020, although the decline from 2025 levels is minor. Manufacturing and construction activity are weak in the world’s largest economies. Upside price risk is more likely to come from cuts in production, rather than increases in demand, and from tariffs at the country level.

The S&P Global Market Intelligence Purchasing Managers’ Index™ (PMI®) for global manufacturing new orders climbed slightly into positive territory in August and September. The data indicates expanding activity, though with inventories of finished goods picking up, suggesting the recent improvement was heavily due to stockbuilding.

As measured by the Materials Price Index (MPI) by S&P Global Market Intelligence, industrial materials prices increased 2.3% in the third quarter after declining 7.5% in the second quarter of 2025. A significant decline in crude oil prices will drive a 2.6% decline in the MPI in the fourth quarter.

Crude oil prices are set to decline in the fourth quarter of 2025. OPEC+ members are the chief cause of the oversupply. October and November were both announced to see further, albeit modest, increases in production. The key reason that surpluses have not yet been visible is that mainland China has been building up its stocks. These stock builds are expected to decline in the fourth quarter, and so prices will fall, too.

US natural gas prices will fall in the fourth quarter. Mild weather in August and early September allowed inventories to balloon. Production, too, has remained high, which has helped facilitate higher inventories. Higher export capacity — and thus exports — will lead to inventories drawing down below year-earlier levels in 2026, elevating pricing.  Prices will come down after spiking slightly in the first quarter of 2026.

In contrast, European natural gas prices are projected to increase over the 2025-26 winter, although prices will broadly decline after that. The global gas market will see structural loosening owing to a sharp rise in US exports. Demand remains weak, driven by both a lack of consumer demand and rising renewables production crowding out thermal generation. 

A lower oil price outlook will reduce key feedstock costs and send chemical prices in some regions even lower through the end of 2025, despite already low chemical and resin pricing being seen largely across the board. Low feedstock costs, weak demand, and overcapacity are contributing to downward price pressures. Prices will likely find a floor shortly, but upside is limited. 

In North America, plunging upstream propylene monomer costs have helped drag polypropylene prices down. Demand will remain weak compared with historical standards, as reduced consumer spending continues to lessen buyer interest in polypropylene. 

In Europe, prices in the European polypropylene market decreased slightly in September as demand remains weak. Demand is expected to remain low compared with historical standards, as reduced consumer spending continues to diminish buyer interest in polypropylene. 

Lackluster market conditions and supply length for polypropylene are not only across Asia but also in Europe and the Americas. Excess capacity, combined with limited downstream end-user demand for derivatives, means little improvement in narrowing the oversupply gap is expected for the foreseeable future.

Steel markets are weak globally with ample supply, idle capacity, and weak to falling demand. Steel is a buyer’s market in all regions of the world, for all products except the niche aircraft steel grades. However, recent events point to a potential rebalancing in coming months. Market speculation suggests that mainland China may make structural moves to permanently cut capacity, which would be the most significant change to the steel industry in this decade. We will monitor developments closely but will not revise our outlook until we see strong evidence that it is policy rather than rumor. 

The European Commission has proposed increased protection for its steel market by strengthening its tariff-rate quota (TRQ) system. The proposal increases tariffs from 25% to 50% and reduces the quota by about 47% from 2024 levels. We include the impact of the tariffs and a smaller quota in this forecast, with implementation in the third quarter of 2026. The result is moderately higher European steel pricing from the second half of 2026 and slightly lower pricing in Türkiye and Asia, key exporters to the European market.

Other than trade barriers, there is no support for substantive price increases anywhere in the world.

Copper prices have been driven up by immediate supply disruptions and concerns about market tightness. Prices spiked up on the news that the second-largest mine would be partially offline until the end of 2026. Subsequent downgrades in production guidance from another producer now point to a deficit developing in 2026.

Aluminum prices are rising on supply concerns. While demand growth is poor, with lead indicators pointing to weak expectation in the key construction and automotive sectors, capacity additions have been minimal. Supply worries are growing because of the lack of capacity additions.

Nickel prices will remain near the $15,000/metric ton cost floor in 2026 amid slowing demand growth in Asia, ongoing increases in lower-cost supply from Indonesia, and higher visible inventories on the major exchanges following the approval of several new Asian brands to deliver nickel to the London Metal Exchange (LME) over the past two years.

—With contributions from Keyla Goodno