5 Key Commodity Trends to Watch In 2025

As we step into 2025, key commodity trends are shaping global markets, influencing industries, and driving investment decisions. From the rising demand for natural gas to the ongoing challenges in steel overcapacity, understanding these trends is crucial. Oil markets face uncertainty with shifting demand, while gold continues its upward momentum, fueled by economic shifts. Meanwhile, grain prices are stabilizing after a significant drop. 

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Whether you're an investor or an industry player, staying ahead of these trends can help you navigate market fluctuations and seize opportunities. Let’s explore the five key commodity trends to watch in 2025.

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1. Natural Gas Set for Strong Growth Fueled by Rising Demand

One of the key commodity trends is Natural gas. Natural gas  is expected to experience significant growth this year, driven by rising demand. Throughout the past year, natural gas prices remained relatively stable due to robust production levels and record-high storage inventories, which helped to moderate price fluctuations.

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Looking ahead, supply risks are expected to increase, leading to greater demand for liquefied natural gas (LNG). The United States is set to be a key source of LNG, with new export capacity in the Gulf of Mexico coming on later this year. Additionally, prices in the US are likely to be further supported by rising industrial demand and increased piped exports to neighbouring countries.

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2. Steel overcapacity is expected to worsen

Steel prices have been weak due to low demand and an oversupply of steel, a trend likely to continue into 2025. Domestic steel demand in China remains low as the steel-heavy property sector shrinks.

Global manufacturing activity has decreased this year, affecting demand. This weak demand is anticipated to continue into early 2025 due to the delayed impact of monetary tightening on consumer spending. However, as central banks in developed economies begin lowering interest rates, spending in capital-intensive industries is expected to rise later in 2025. Consequently, global demand for metals outside of China is likely to recover gradually throughout 2025, providing some support for prices.

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3. OPEC+ Faces Tough Decisions as Oil Supply Set to Rise

Global oil demand has been weaker than expected, and we forecast global economic growth in 2025 to be steady but unremarkable. China’s slowdown and slow industrial and construction activities have limited oil demand. In the US, gasoline inventories are higher than usual, signalling lower demand. Additionally, long-term oil demand in developed countries will decline as more people switch to electric vehicles. This trend, combined with weak market sentiment, could lead to further decline in Brent crude prices.

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4. Gold is expected to continue its upward trend

Following the Fed's 50bps rate cut in September 2024, gold has gained significant support from falling yields. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, stimulating investment demand through exchange-traded funds, which will help push gold prices higher.

Demand from emerging market central banks has also bolstered gold's appeal. This is seen as part of a strategy to diversify reserves away from the US dollar, with China being the largest buyer, acquiring more than 180 tonnes over the last two years.

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While there may be some short-term consolidation in prices, we maintain a positive outlook for gold. The fundamentals remain strong, driven by continued central bank purchases and demand linked to falling Treasury yields, ensuring gold remains one of the best-performing assets in 2025.

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5. Grain Prices Poised to Hit Their Lowest Level

Commodity trends, such as grain prices have dropped significantly this year. However, prices are now beginning to stabilize, aligning with our earlier expectations.

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The primary reason for the weak price movement this year is supply. Agricultural markets are well-supplied, as evidenced by the stocks-to-use ratios. The soybean ratio for 2024/25 is projected to be the highest in 17 years, driven by strong harvests in Brazil and weak demand.

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Similarly, the maize ratio remains high for 2024/25. In contrast, the wheat ratio continues to decline, signalling a tightening market, though it remains at a manageable level. While Indian export restrictions had kept rice prices high despite good harvests, the recent removal of these restrictions has caused prices to drop.

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Rice prices are expected to fall year-over-year in 2025 due to the easing of Indian export restrictions. As for other agricultural commodities, rising fertilizer prices are likely to help stabilize prices. Soybean prices are expected to remain low in 2025, reflecting a looser market.

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Prices for maize and wheat are anticipated to increase from current levels, but they will still remain below the peaks seen in 2021-2023.