Commodity markets are increasingly being shaped by supply-chain resilience, processing capabilities and geopolitical considerations rather than price movements alone, as demand growth linked to electrification, energy infrastructure and industrial policy reshapes investment priorities across metals and minerals.
The market has effectively divided into three interconnected segments: scarcity-driven metals such as copper and aluminium, policy-sensitive critical minerals including lithium, nickel, cobalt, graphite and rare earths, and bulk commodities such as steel, iron ore, fertilizers and cement feedstocks. Access to reliable supply, refining capacity, carbon intensity and exposure to trade restrictions have become central factors influencing valuations and procurement strategies.
According to the World Bank’s latest commodity outlook, overall commodity prices are projected to increase by 16% in 2026, while energy prices are expected to rise by 24%. Several key metals are approaching record levels amid growing demand from power infrastructure, electric vehicles, data centres and supply disruptions. Market participants are increasingly assigning value not only to physical output but also to supply chains capable of operating without interruption through ports, smelters, refineries and customs systems.
Copper Supply Constraints Draw Strategic Attention
Copper remains a focal point of the energy transition due to its importance in electrical grids, renewable energy systems, electric vehicles and data centre infrastructure. While the International Energy Agency (IEA) estimates lithium demand increased by nearly 30% in 2024 and demand for nickel, cobalt, graphite and rare earths rose between 6% and 8%, copper supply growth remains constrained by declining ore grades, limited major discoveries and lengthy mine development timelines.
The IEA has identified the potential for a 30% global copper supply deficit by 2035, despite continued growth in demand from electrification and artificial intelligence-related infrastructure.
As a result, copper projects in strategically important jurisdictions are increasingly viewed as industrial-security assets. In Serbia, Zijin Mining’s Čukaru Peki and Bor operations have become a major European copper production platform. The company reported combined 2025 production of 296,000 tonnes of copper and 9.1 tonnes of gold, while guidance for 2026 stands at 296,000 tonnes of copper and 8.1 tonnes of gold. Expansion plans target annual copper production of 450,000 tonnes, which would make Zijin the largest copper producer in Europe.
Lithium Faces Short-Term Surplus Despite Long-Term Demand Growth
Lithium markets are experiencing a different dynamic. While current supply exceeds demand, long-term forecasts indicate substantial future consumption growth. The IEA reported that lithium prices, after increasing eightfold during 2021 and 2022, have declined by more than 80% since 2023. Nickel, cobalt and graphite prices have also weakened as supply expanded rapidly from China, Indonesia and the Democratic Republic of the Congo.
Despite weaker prices, demand forecasts remain strong. The United Nations Conference on Trade and Development (UNCTAD) projects lithium demand will increase by 353% between 2024 and 2040, while graphite demand is expected to rise by 131% over the same period. The disconnect between near-term oversupply and long-term strategic requirements has encouraged major mining companies to continue pursuing lithium investments even as junior developers face financing challenges.
Rio Tinto’s Jadar lithium-borates project in Serbia remains politically contested but has been designated by the European Union as a strategic raw materials project. Reuters has reported that the development could supply up to 90% of Europe’s current lithium requirements if brought into production. The most recently disclosed capital cost estimate exceeded €2.55 billion, although the company has since been revising project costs to align with European environmental and human-rights standards. Rio Tinto’s broader lithium strategy also includes its $6.7 billion acquisition of Arcadium Lithium and more than $1 billion in additional investments across projects in Chile.
Concentrated Supply Chains Drive Policy Responses
Supply concentration remains a significant concern for governments and manufacturers seeking secure access to critical minerals. UNCTAD estimates that in 2025 the Democratic Republic of the Congo accounted for 74% of global cobalt mine production, while Indonesia produced 67% of global nickel mine supply and China supplied 69% of rare earth mine production. China also maintains dominant refining positions in rare earths, lithium and cobalt, while Indonesia controls 43% of global nickel refining capacity.
Since 2020, nearly 100 export-control measures affecting energy-transition minerals have been introduced worldwide, including quotas, licensing requirements, export taxes and outright export bans.
In June 2026, G7 leaders agreed to reduce dependence on any single foreign supplier for rare earths and permanent magnets to below 60% by 2030, with a longer-term objective of reaching 50%. Initial coordinated efforts will focus on lithium and nickel supply chains, while the IEA has been assigned expanded monitoring and early-warning responsibilities. Reuters reported that 195 critical minerals projects representing €64 billion in investment have been announced since the beginning of 2026.
European Union Expands Strategic Minerals Portfolio
The European Union’s response has centred on implementation of the Critical Raw Materials Act. The European Commission has identified 47 strategic projects within the bloc to support production across 14 critical raw materials, aiming by 2030 to source 10% of requirements through mining, process 40% domestically and recycle 25% of demand.
The selected projects cover materials including aluminium, copper, nickel, lithium and rare earths and are located across Germany, France, Italy, Spain, Greece, Sweden, Finland, Portugal, Poland and Romania, among other member states. An additional 13 projects outside the European Union have also received strategic designation, including Serbia’s Jadar project.
Aluminium Industry Faces Energy and Carbon Challenges
Aluminium continues to occupy a unique position between mining and energy markets because electricity remains the dominant cost and operational factor in smelting. Major producers including Norsk Hydro, Rio Tinto, Alcoa, Rusal, Emirates Global Aluminium and China Hongqiao compete not only through access to bauxite and alumina but also through power availability, carbon intensity and smelter efficiency.
Within Europe, aluminium producers are increasingly affected by the Carbon Border Adjustment Mechanism (CBAM), electricity market volatility and decarbonisation policies. The full CBAM framework comes into force in 2026 and covers imports of iron and steel, aluminium, cement, fertilizers, electricity and hydrogen while coinciding with the gradual elimination of free allowances under the EU Emissions Trading System.
Steel and Iron Ore Demand Patterns Shift
The steel sector is entering a different phase of the commodity cycle. The World Steel Association forecasts global steel demand will increase by 0.3% in 2026 to 1,724 million tonnes, before expanding by 2.2% in 2027 to 1,762 million tonnes.
China’s steel demand contraction is expected to moderate to 1.5% in 2026, while India is forecast to remain the strongest major growth market, with steel demand projected to rise 7.4% in 2026 and 9.2% in 2027. These trends are influencing the strategic positioning of major iron ore producers including BHP, Rio Tinto, Vale and Fortescue, which continue to depend on Chinese demand while expanding focus toward India and ASEAN markets.
China still accounts for approximately 75% of global seaborne iron ore consumption. Reuters reported that Chinese iron ore imports increased 6.3% during the first five months of 2026 to 516.26 million tonnes, even as steel production declined 4.1%. Part of the import growth appears linked to inventory accumulation rather than underlying steel demand. India’s long-term expansion plans remain significant, with national steel production targeted to increase from approximately 168 million tonnes currently to around 400 million tonnes by 2035–36.
Fertilizer Markets Linked to Energy Security
Fertilizers are increasingly influenced by the intersection of energy markets, food security concerns and industrial policy. The World Bank expects fertilizer prices to rise by approximately 31% in 2026, led by urea as gas-related production costs and geopolitical disruptions support higher pricing for nitrogen products. Companies including Yara, Nutrien, CF Industries, OCI, Fertiglobe, Romgaz and Azomureș are operating within broader debates surrounding natural gas security, ammonia production capacity and agricultural input affordability.
Processing and Value-Added Capacity Gain Importance
Investment preferences are increasingly favouring projects that control multiple stages of the supply chain. Mining operations with integrated power strategies, water management systems, tailings infrastructure and access to regional processing facilities are attracting stronger valuations than isolated resource assets. Similarly, lithium developments with established processing plans, permitting progress and battery-sector offtake agreements are securing stronger financing support than early-stage exploration projects.
Within Europe, projects such as Vulcan Energy Resources in Germany, Talga Group in Sweden and Euro Manganese’s Chvaletice tailings reprocessing project in the Czech Republic reflect efforts to expand downstream processing, recycling and value-added production alongside resource extraction.
At the same time, higher-cost producers lacking strategic locations, low-carbon energy sources, processing capabilities or established environmental, social and governance credentials are facing increasing pressure. Producers of carbon-intensive steel, aluminium, cement and fertilizer products are also confronting stricter requirements linked to CBAM implementation, customer procurement standards and financing conditions.
