Commodity Price Watch: February 2026

Prices will be flat in 2026 for most globally traded industrial commodities. Crude oil will dip into mid-2026 on oversupply. Rising trade barriers will continue to be an important factor for buyers. The US led in 2025; now, the movement for 2026 is to some extent the rest of the world joining the party

As measured by the Materials Price Index (MPI) by S&P Global Market Intelligence, industrial materials prices bottomed in the second quarter of 2025 and will revisit those levels in the second quarter of this year. For the fourth quarter of 2025, the MPI was 5% below its year-earlier level. Prices are returning to year-earlier levels, however, as the MPI for the second quarter of 2026 is forecast to be 0.4% below the previous year.

With pockets of oversupply in some areas and tight fundamentals in others, there is no overarching trend for industrial commodities. The most general summary is that 2026 spend will be quite similar to 2025, if the basket looks similar to the MPI, although country-specific tariffs will lift spend where the tariffs have gone up. 

A relatively new and very important feature of commodity markets is extreme regionality. Historically, commodities were traded globally and similarities outweighed differences between regions. Protectionism and logistics disruption have changed this global view. There is also variation across category fundamentals. 

A global supply surplus averaging just under 1 million barrels per day for 2026 will continue to drive prices down over the year.

In the shorter term, geopolitics is shifting prices. The first quarter of 2026 will see Brent crude prices averaging $63/barrel. This is elevated relative to expectations because of tensions between the US and Iran leading to a risk premium. The most likely scenario is that the risk premium erodes as market fears of a supply disruption ease. This is far from certain, though, and some military intervention could send prices higher.

Venezuelan exports will grow modestly by the end of 2027 relative to the 2025 average, helping ease global prices marginally. India will reportedly stop importing Russian crude owing to a trade deal with the US, but Russian barrels will likely still find their way onto global markets.

The majority of pricing series in February experienced an upward revision in the near term compared with last month, largely driven by significantly higher spot crude oil pricing in recent weeks. The most notable example is with benzene and benzene derivatives, which makes sense given how closely benzene normally tracks crude oil.

Still, there are exceptions. The most pronounced one is North American ethylene pricing, which saw a significant downward revision because of upstream natural gas coming in softer than anticipated so far in 2026. In addition, some modest downward revisions were put in place for a few European markets because of an overabundance of supply.

Steel will be oversupplied globally but high import barriers in the US and the EU support elevated pricing. Prices rise in Asia but slowly and from a low starting point. Supply is ample and idle capacity is rampant, so shortages are unlikely. Prices trend upward based on production restraint and rising protectionism. However, protectionism causes price weakness in net exporting markets.

Demand will remain subdued well into 2026. Expect demand for most end markets to be weak enough it will not alone cause upward price pressure in the European Union, the United States, and mainland China. There is stronger demand in India and Southeast Asia, but their expansion is insufficient to offset the wider weakness elsewhere. Mills are restraining output to limit surplus, leaving much capacity idle. Prices barely cover the cost of production in key regions such as East Asia, and mills often sell at a loss.

Aluminum prices remain elevated on a combination of tight supply and bullish financial speculation. Prices reached a four-year high at the end of January before retreating. We expect them to hold at high levels for the rest of the first quarter, before starting to ease on improving supply, with speculators turning less positive on metals and taking profits. These developments are becoming visible, with inventories ticking upward and financial positioning on exchanges turning more neutral. However, the return will be slow and anemic, rather than a sharp correction downward.

Copper prices remain elevated on a combination of tight supply, tariff uncertainty, a weaker US dollar and financial speculation. These drivers are largely unchanged from January’s report. However, the strength of upward price pressures has waned, with prices stepping down and cycling rather than pushing incessantly upward. Risks remain elevated. Supply that is mostly balanced could turn negative on any supply reductions, becoming tied up in financing or tariff policies, which may change at short notice.

The Lunar New Year holiday should bring a lull in industrial demand and a temporary letup in speculatory activity, as mainland Chinese traders take a break, but adds to the uncertainty when they return.

--With contributions from Keyla Goodno