Commodity markets are set for a volatile year, with copper, precious metals and rare earths supported by supply tightness, geopolitical risks and currency dynamics, while ferrous metals face weaker prospects amid slowing demand from mainland China, according to a webinar hosted by BMI – a Fitch Solutions Company on February 5 titled ‘Mining & Metals Key Themes For 2026: Global Economic Stability To Drive Gains’.

Speaking during the webinar, BMI commodities analyst Amelia Haines said broad tariff uncertainty was expected to ease throughout the year, which should support overall commodity demand, although volatility was likely to persist.

“Our country risk team expects broad tariff uncertainty to continue to decline over 2026. This will support demand for commodities in general,” she said.

However, she cautioned that renewed US tariff pressures could emerge for specific metals as Washington sought to protect critical domestic industries, with copper remaining particularly exposed to further tariff action.

The dollar was highlighted as a central driver of metals pricing and investor sentiment. The recent rally across metals has been supported in part by a weaker dollar, although renewed dollar strength earlier in the week underscored how sensitive markets remain to currency movements.

Haines said BMI’s country risk team expected the dollar to hover within the current 95 to 100 range on the US Dollar Index, while stressing that the likelihood of a breakout in either direction had increased, amplifying risks during a period of elevated volatility.

Copper was identified as the focal point of the current surge in base metals. Prices reached an all-time high of $14 528/t on January 29, supported by a weaker dollar, strong underlying fundamentals, persistent supply-side tightness and uncertainty over potential US tariffs.

According to Haines, copper prices were expected to average $11 900/t this year, supported by constrained supply and resilient non-property demand, which had offset sluggish demand linked to the struggling real estate sector.

Haines noted that copper’s importance to the transition to net zero had heightened market sensitivity to supply disruptions.

“Given copper’s essential role in the transition to net zero, market sentiment is likely to remain acutely sensitive to any supply-side shocks,” she said.

She added that the market had entered this year with narrower supply buffers, leaving it more vulnerable to disruption, while US copper inventories remained at all-time highs. Although fundamentals remained supportive, BMI did not believe they were sufficient to sustain a record-breaking rally driven solely by supply and demand.

Instead, the market continued to reflect what Haines described as an artificial deficit rather than an acute physical shortage, with speculative sentiment appearing to approach a late phase.

Uncertainty over refined copper tariffs is expected to support prices until mid-year, although a definitive policy announcement could trigger a correction and signal an end to US stockpiling.

In contrast, the outlook for ferrous metals was more subdued. Haines said there was limited perceived upside for the sector in 2026, largely owing to weak demand from mainland China.

Iron-ore prices are forecast to average $95/t this year, down from $100/t in 2025, as additional supply enters the market. The speculative rally seen in January is not expected to hold, with prices likely to decline over the course of the year as fundamentals reassert themselves.

According to Haines, the slowing Chinese economy had reduced the scope for a renewed bull run in industrial metals driven purely by demand growth.

Precious metals, by contrast, continue to benefit from geopolitical uncertainty. Gold and silver prices had risen sharply in early 2026, supported by heightened global tensions. Haines said BMI had lifted its gold price forecast to a yearly average of $4 600/oz for this year, with prices expected to remain elevated in the near term.

January saw gold climb to almost $5 600/oz, supported by geopolitical risks linked to Venezuela, Greenland, and Iran.

“Gold thrives on uncertainty,” Haines commented.

Silver has also strengthened, contributing to the broader precious metals rally. Prices reached a new all-time high above $120/oz in late January, while the gold-to-silver ratio fell to a multi-year low.

BMI expected this year to be another strong year for precious metals, although Haines said the durability of the current speculative momentum remained difficult to assess. Gold prices were expected to remain sensitive to broader risk sentiment, movements in the dollar and interest rate expectations.

Haines also discussed rare earths, which had attracted increased attention amid growing geopolitical competition over critical minerals. BMI recently published updated price forecasts for neodymium/praseodymium (NdPr) oxide, reflecting tightening fundamentals and rising political momentum.

Haines noted that mainland China’s dominance of rare earths supply remained pronounced, reinforcing the strategic importance of the sector.

BMI has revised its 2026 NdPr oxide price forecast to $9 000/t, supported by a strong start to the year. Prices reached multi-year highs in early 2026, driven by changes in the geopolitical and regulatory landscape.

Haines said prices were expected to fluctuate in the coming months as supply expectations tightened and demand from clean energy technologies remained strong.

NdPr oxide plays a key role in permanent magnets used in electric vehicles and wind turbines, sectors that continue to expand rapidly.

According to Haines, the NdPr oxide market was expected to remain in deficit for a second consecutive year, even as new supply from outside China entered the market. Demand growth linked to the transition to net zero was expected to outpace supply additions.

While fundamentals remained supportive, Haines said current market dynamics were not yet sufficient to sustain the rally purely on supply and demand, with sentiment continuing to play a significant role. Regulatory developments were expected to remain a key influence throughout this year, and China’s control over strategic minerals was not expected to ease in the short to medium term, she said.

Overall, Haines said that industrial policy would remain the principal means by which countries could secure access to critical minerals this year, with most activity centred around the EU and the US.

She said it could be expected that governments would push a twin-track strategy of scaling domestic capacity while locking in overseas supply through investment and strategic partnerships.

“We also expect robust mergers and acquisitions momentum in the metals and mining sector to continue into 2026, fuelled by the accelerated race for critical minerals, with industry players prioritising opportunities that strengthen their exposure to minerals essential for the energy transition, including but not limited to copper, lithium and rare earths,” Haines said.