This year has proved challenging for commodities and commodity stocks, excluding the relatively stable performances of gold and silver. Factors such as a global economic slowdown and trade uncertainties contributed to a reduced demand. As the industry looks forward to 2025, several dynamics are expected to shape the commodity market.

The resolution of COVID-19 pandemic-induced supply bottlenecks stands to have residual effects on certain commodity prices. In addition, geopolitical tensions and falling global interest rates are likely to play significant roles. The Biden administration’s policies are anticipated to challenge both U.S. and global economic growth by maintaining heightened tariffs on Chinese imports.

China, being a major player in the commodity market, is projected to experience a slowdown, with GDP growth estimated at 4.2% for 2025. This may affect global commodity demand, especially in sectors heavily reliant on Chinese consumption.

Citi’s forecast for 2025 maintains minimal changes to base metals prices. However, the firm predicts varied outcomes across other commodities:

– Uranium and Rare Earths, The most significant price increases are expected for uranium and Neodymium-Praseodymium (NdPr), bolstered by rising demand for uranium in the U.S.

 

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– Iron Ore and Crude Oil: The greatest downside risk is anticipated in these commodities, along with alumina.

– Coal: Demand, particularly for coking coal, is likely to rise, driven by strong Indian steel production.- Base Metals and Precious Metals: These categories are predicted to see subdued growth in 2025, with a potential recovery by up to 10% in 2026.

Incentive prices and increasing capital expenditures are expected to provide support for commodity prices. These factors could buffer against potential downturns linked to political and economic uncertainties.

Citi has updated ratings and price targets for key ASX commodity stocks, indicating strategic shifts in investment expectations. Notable adjustments include:

– New Hope Corporation: Upgraded to a BUY with a 10% price increase target, reaching $5.50.
– South32: Downgraded to NEUTRAL.
– BHP Group: Maintained at BUY with a target of $46.00.

While 2025 presents complex challenges for commodity markets, strategic supply-demand dynamics and adjusted economic policies will navigate these hurdles. Investors and stakeholders should remain vigilant of geopolitical developments and economic policies that could alter the current trajectory of commodity prices.