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Informist, Friday, Jan. 23, 2026

MUMBAI – Industrial metals are set for volatility in 2026 as supply disruptions, policy uncertainty and geopolitics weigh on production growth for key metals such as copper and aluminium, while nickel supply expansion is expected to slow. Precious metals are likely to remain supported by ongoing political and economic uncertainty and strong investment demand, though some price retracement is expected later in the year as conditions stabilize, ANZ said in a research report. Energy prices are set to remain volatile with limited downside. Geopolitical risks and China's stockpiling are expected to offset rising supply and inventory builds, the report said.

The industrial market is likely to remain undersupplied by 4-5% of annual demand, keeping the prices supported. Copper mine supply lost more than 500 kilotonnes of production due to issues at major mines in the previous year. "There will be spillover impacts on production this year, with mine supply struggling to increase in H1 2026," the report said.

Global copper demand grew a stronger-than-expected 3% in 2025 as economic growth outpaced expectation despite elevated trade tensions. Demand from the energy transition and data centres is expected to remain resilient, although higher prices could weigh on consumption, the report said.

Aluminium prices are expected to stay elevated but volatile in 2026, with a risk of short-term pullbacks despite a constructive medium-term outlook. Prices have climbed above $3,000 per tonne, the highest since 2022, supported by a projected market deficit, while near-term pressure stems from strong Chinese output and shifting production. Market dynamics will be shaped by US trade policies, Europe's Carbon Border Adjustment Mechanism and China's production cap, which is expected to keep output broadly flat after nearing its 45 million tonne ceiling, even as some capacity shifts to Indonesia. Trade policy uncertainty has fragmented the market and driven premiums sharply higher in the US, Europe and Japan, while Carbon Border Adjustment Mechanism-related cost increases could add volatility. Despite these factors, underlying fundamentals remain supportive through 2026, according to the report.

Nickel prices are expected to see a limited upside in 2026 despite a recent rally, as the market is likely to remain oversupplied and demand conditions remain weak. Prices have risen sharply since late December on news that Indonesia plans to cut mining output quota to support prices, but this move is not expected to have an immediate impact on production. While Indonesia's supply growth is slowing, output is still expected to exceed 2.7 million tonnes in 2026, and additional production cuts would be needed to meaningfully narrow the surplus. On the demand side, the outlook remains subdued due to challenges in electric vehicle sales, with the expiry of subsidies in the US and China weighing on EV production and battery demand, leaving the market oversupplied by more than 5% of annual demand, the report said.

PRECIOUS METALS

Precious metals have started the year on a strong footing amid rising political and economic uncertainty, with the drivers behind the 90% rally in 2025 still largely intact, leaving room for further upside in 2026. Some price retracement is expected later in the year as geopolitics and trade negotiations stabilise and industrial demand adjusts, with gold likely to remain firmer than silver and platinum, the report said.

Expected rate cuts in the first half of 2026 and a softer US dollar are expected to support investment flows into non-yielding assets, while sustained geopolitical risks, strong central bank buying and growing investor interest in ETFs are set to underpin gold demand. Given the small size of the gold market relative to major asset classes, even modest portfolio shifts could have an outsized impact on prices, supporting a bullish outlook for gold through 2026, the report said.

The supply disruption in the silver market is expected to ease gradually after the US decision to hold import tariffs on critical minerals. "While silver's strategic rerating and spot market tightness are still supportive, we believe the recent sharp price rise and increasing uncertainty around economic growth due to renewed trade tariff rhetoric could weigh on industrial demand," ANZ said. An economic slowdown is likely to weigh disproportionately on the white metal due to its industrial exposure.

Silver is typically viewed as a tactical rather than strategic asset, with investors often pursuing shorter-term opportunities. Unlike gold, silver is not held in central bank reserves, so it lacks that stable institutional base, the report said.

ENERGY

Oil prices are likely to remain volatile in 2026 with limited downside, despite the global market moving into a supply surplus, as persistent geopolitical risks continue to underpin prices. US sanctions on major Russian producers, political uncertainty in Venezuela and rising tensions in Iran keep significant volumes of supply at risk, particularly shipments to India, while OPEC+ has paused production hikes in early 2026, according to the report.

Although additional supply could emerge from geopolitical developments, the impact on prices is expected to be modest. In the near term, reluctance by Indian and Chinese refiners to take Russian crude and ongoing tensions may delay inventory builds and support prices, even as higher output and lower refinery runs push the market into a surplus of around 1.74 million barrels per day. China's continued strategic stockpiling and relatively low inventory levels outside China are expected to limit the downside for oil prices, the report said.   End

US$1 = INR 91.63

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Udita S. Jaiswal 

Edited by Akul Nishant Akhoury

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