Explore highlights from our recent Commodity in Focus webinar, where we examined the potential impacts of major upcoming events in 2025 on key commodity markets.
As 2024 draws to a close, 2025 is set to be another year of widespread disruption. From the US election and ongoing wars in Israel and Ukraine, to interest and inflation cuts in the US and Europe, procurement teams should prepare for significant fluctuations across key commodity markets.
In the latest edition of our Commodity in Focus series, WNS Procurement’s Senior Commodity Intelligence Specialist, Nishita Sharma, and commodity experts Anuj Madaan, Vivek Aggarwal and Garvit Gupta took a deep dive into the major global events poised to shape the commodities landscape in 2025.
During the session, the panel looked at a selection of expected events and explored their potential impacts on base metal, precious metal and crude oil commodity markets. You can watch the full session on demand to hear everything our experts had to share, but here are some of the key takeaways from the session to get you started.
Event #1: Rate cuts in the US and Europe
Opening the main discussion, Anuj introduced us to the events that will very likely impact commodity markets in the final months of 2024 and throughout 2025. “Firstly, we expect to see interest rate cuts by central banks in the US and the Eurozone, accompanied by a fall in inflation rates,” he explained.
“In September the US Federal Reserve issued a rate cut, signalling that further change is coming,” Anuj continued. With US unemployment forecasted at around 4.4% in 2025, what we’re seeing develop is a picture of very gradual economic recovery and growth.
Diving into what these rate cuts will mean for metal and oil prices, Vivek explained that “when the US Federal Reserve cuts interest and inflation rates, spending is incentivised, leading to higher business demand for most major commodities. So, the greater the cut, the more we can expect to see commodity prices rise”.
If rate cuts do not continue, however, prices could potentially fall further. So, close monitoring of all relevant central bank actions will be required to ensure organisations understand how these rates will impact the prices of commodities they buy.
Event #2: The US presidential election
Next, Anuj discussed the potential impacts of the US presidential election. Whatever the outcome, this election is likely to have a lasting impact on global markets—and key commodities such as metals and crude oil are no exception.
“If the election ends in a Trump clean sweep, we can expect to see domestic, trade, foreign and federal policy changes that drive metal and oil prices down,” he explained. “A constrained Trump victory would have the least impact on commodity markets, while a Harris victory could lead to changes that push prices up in the short term.”
However, lessons from the 2016 election show us that such presidential races can also lead to significant short-term economic disruption. There is no real way of telling what decisions either candidate will make shortly after taking office, so we can expect to see some level of volatility and heightened fluctuation in most major commodity markets around that time.
Event #3: China’s economic slowdown
The third event the panel explored was China’s ongoing economic slowdown. Early indicators, such as lower investment in real estate, point towards reduced GDP growth in China. “If China’s economic slowdown continues as we expect it to, production and exports from the country will drop, reducing demand for raw materials and causing commodity prices to decrease,” Anuj explained.
The impact of China’s economic slowdown hinges on the country’s level of GDP growth. If it falls as low as 4.5%, we could see commodity prices fall in line with reduced demand from Chinese manufacturers and other industrial buyers. But, if it grows to 5.1%, the inverse will happen, sending metal and oil prices upwards.
“Automotive sales in China track very closely with precious metals markets,” explained Vivek. “New emissions regulations on cars have driven demand for platinum for catalytic convertors, so as production increases, so too does precious metal demand.”
Event #4: Ongoing geopolitical tensions and conflict
Finally, the panel discussed evolving geopolitical conflict across the Middle East and the ongoing Russia-Ukraine war. Beyond the humanitarian cost, geopolitical conflicts always have a profound effect on commodity markets. However, with multiple conflicts taking place simultaneously across the globe, the potential for disruptions that drive up prices is very significant – and will remain that way throughout 2025 unless peace agreements are made.
“The crude oil market in particular is tightly linked with geopolitical tensions and conflict,” explained Garvit. “A look back at our recent history shows sharp price changes during times of conflict – especially those in major oil producing regions like the Middle East.”
The more these conflicts escalate, the more we can expect base metal, precious metal, and crude oil prices to increase throughout 2025. So, all procurement teams should keep a close eye on how the various tensions happening today develop, and make adjustments to their buying strategies in line with those developments.
How these events will impact base metal, precious metal and crude oil prices
Each event has the potential to impact commodity markets in a variety of ways, and to different degrees. During the session, the panel laid out three price scenarios for each event, as shown below:
While we don’t know exactly how each event will play out, we can confidently forecast the impact that each potential outcome will have on commodity markets. So, as we move into 2025, all procurement teams need two key things: a plan that lays out how they’ll adapt to each potential market shift scenario, and continuous insights and intelligence to help them understand which scenario is going to play out.
WNS Procurement provides procurement teams with deep visibility of commodity and category markets, empowering them to make proactive changes to buying strategies and minimise the impact of globally disruptive events. To learn more about how we can help you prepare for what 2025 has in store and ensure stable supply of the commodities your business depends on, get in touch today. Or, to explore our team’s analysis of these events in more detail watch the full webinar on demand now.