Commodity Price Watch: November 2025

Industrial commodity prices will be lower in 2026 than any year since 2020, although the decline from 2025 levels is minor. Demand from both manufacturing and construction activity is weak in the world’s largest economies. Any upside price risk is more likely to come from supply disruption rather than increases in demand and from tariffs at the country level.

The Purchasing Managers’ Index™ (PMI®) by S&P Global for global manufacturing activity climbed slightly into positive territory in August and has stayed there through October. 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 decline in the MPI in the fourth quarter. The index that tracks the six base nonferrous metals, in contrast, is set to increase  over the second half of 2025 before retreating in 2026.

Crude oil prices remain in broad decline as a global supply surplus suppresses prices. These declines hit a speed bump at the end of October as the US announced sanctions on two Russian oil companies. Thus far, markets have seen only a muted response and the extent of the effect depends on the extent of sanctions enforcement by the US administration.

Sanctions aside, OPEC+ members remain in the driver’s seat. Production increases since April mean supply surpluses in the fourth quarter of 2025 and in each of the first and second quarters of 2026. OPEC+ members have announced a pause to their production increases for the first quarter of 2026, but this will not put oil back on the market. 

US Henry Hub natural gas prices have begun to increase as new export demand takes hold. Inventories exceeded the five-year maximum this year, but the additional feedgas demand will draw down inventories into a deficit come January. As such, the first quarter of 2026 will see prices rise and they will remain above $4/MMBtu until the end of 2027. 

Chemical prices continued their downward trend during the first week of November, with the chemicals subindex of the MPI declining 2%. This represents the seventh consecutive weekly decline of the chemicals subindex.

Even with energy feedstock costs rising in recent weeks, weak demand and oversupply continue to dominate chemical price negotiations. For example, average weekly propylene prices in the United States and Asia were down in the most recent weekly report, because of the long conditions in the market. Prices will likely find a floor shortly, but upside is limited. 

European propylene prices declined in November as feedstock costs eased and demand remained constrained. The oil price outlook remains weak, despite the key OPEC+ group of eight countries deciding on Nov. 5 to increase oil supply in December. This results in a lower feedstock cost projection for propylene in 2026, supporting a forecast for price declines through the first half of 2026. 

Steel remains a buyer’s market globally, with weak demand, ample supply and excess capacity. The only exceptions are grain-oriented electrical steel (GOES) and non-grain-oriented electrical steel (NOES) and niche aircraft steel grades.

We see the possibility of a potential rebalancing in coming months, although we assess that it has a low probability. Market speculation suggests that mainland China may make structural moves to permanently cut enough capacity to tighten its market, 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 speculation.

Demand will remain subdued well into 2026. Most end markets in the European Union, the United States, and mainland China will remain flat to in outright contraction. The stronger markets in the world are India and Southeast Asia, but their expansion is insufficient to offset the wider weakness elsewhere. Mills are forced to restrain output to limit surplus. Prices are near the cost of production in key regions such as East Asia and Europe.

Other than trade barriers, there is no support for substantive price increases anywhere in the world. Prices have limited room to decline because they are near or below input costs in many regions. Prices have limited room to rise because buyers cannot or will not pay increases. 

Copper prices have found further support by the same tight supply picture started last month. Although there have been few stories of mine outages recently, several miners have reported lower copper production guidance for the coming 12 months. This has been mainly attributed to a reduction in the quality of copper ore being mined, rather than issues with production. This, in turn, partly stems from miners recently tapping higher-grade deposits, to increase output, but now being forced back into mining lower-concentrate deposits.

Aluminum supply has been a developing concern. Strong demand for the light metal and limited capacity additions are pushing the market balance toward a deficit. Despite additions from mainland China now almost capped, there is little fresh capacity being added. More generally, acquiring competitive electricity is a growing stumbling block to many operations. 

The nickel market is facing a prolonged period of structural oversupply as mainland Chinese nickel producers have scaled the learning curve over the past five years, bringing new refining capacity online in Indonesia faster and cheaper than anyone thought possible. Mainland Chinese nickel producers have also developed new technologies to economically convert the cheaper laterite ores found in Indonesia into class 1 nickel metal, substantially increasing the global supply of lower-cost class 1 nickel.

This new source of supply is having a profound impact on global supply and visible inventories after the London Metal Exchange (LME) announced a fast-track approval process to expand the number of brands approved to deliver nickel to the LME following the nickel short squeeze in 2022. 

—With contributions from Keyla Goodno