Key Takeaways:
Fitch Ratings raised most of its short-term price assumptions for metals and mining commodities, reflecting year-to-date price performance and supply-demand dynamics shaped by geopolitical disruptions, trade constraints and production curtailments.
"The increase of copper price estimates for 2026 reflects the strength in prices since the beginning of the year," Fitch said in a note published Thursday, citing resilient demand despite a slowdown in energy transition policy implementation in certain developed markets.
Aluminum faces the most acute supply shock. Attacks on production infrastructure in the Middle East and controlled shutdowns related to shipping disruptions have sidelined between 3 million and 3.5 million tonnes of annual capacity, representing approximately 4 percent to 4.8 percent of global capacity, according to Wood Mackenzie. Fitch raised its aluminum price assumptions for 2026 and 2027, noting that lower global inventory levels should support prices into 2027 even if the Strait of Hormuz reopens this year.
The breadth of the revisions — spanning 11 commodities with only gold left unchanged — shows that supply constraints from Indonesian nickel quotas to Congolese cobalt export restrictions are tightening physical markets across the board. The next catalyst will be the trajectory of Middle East tensions and Chinese demand data in the second half of 2026.
Strait of Hormuz Disruptions Reshape Aluminum, Nickel Supply
Iron ore short-term assumptions were raised to reflect higher shipping and logistics costs driven by energy cost increases related to the war in Iran. Coking coal assumptions for 2026 and 2027 were lifted because of year-to-date price gains and tighter supply following disruptions in Australia and a mining accident in China, while demand from steel producers remains robust.
Zinc assumptions reflect recent supply deficits, logistical constraints and disruptions to smelting operations. Wood Mackenzie estimates these factors will lead to a 4.3 percent decline in mine production and a 0.7 percent drop in refined zinc output this year. Fitch expects these challenges to ease by 2027, with mine and refined production growing 6.2 percent and 1.8 percent respectively, shifting the market into surplus.
Nickel's short-term assumption was raised on price firmness since the start of the year, influenced by mining permit quotas imposed by the Indonesian government and lower production linked to sulfur supply constraints — transport of which depends largely on transit through the Strait of Hormuz.
Cobalt, Lithium See Supply-Driven Revisions
Cobalt assumptions for 2026 were raised to account for export restrictions in the Democratic Republic of Congo, which accounted for approximately three-quarters of global cobalt production in 2025, as well as a decline in Indonesian production linked to the rationalization of sulfur use.
Lithium assumptions reflect a tightening supply-demand balance, supported by stronger demand for energy storage systems and concerns over potential supply disruptions. Low inventory levels throughout the battery value chain and rising raw material costs also support the upward revision. Fitch noted that prices are expected to remain highly volatile because of fears of a potential demand slowdown, persistent supply risks and rising transport costs.
Precious Metals, Thermal Coal Also Revised Higher
Platinum group metals demand is supported by increased investor interest in alternatives to gold and silver. Higher price assumptions for platinum and rhodium in 2026 reflect year-to-date price movements, though Fitch believes longer-term prices should return to levels consistent with supply and demand fundamentals. Gold assumptions remain unchanged.
Thermal coal assumptions for 2026 were raised because of geopolitical tensions and increased demand from Japan, South Korea and Taiwan, as buyers bolstered supplies to hedge against potential disruptions in LNG deliveries. Assumptions for 2027 were also raised because of uncertainties surrounding Indonesian policy after the government proposed centralizing coal exports.
This article is for informational purposes only and does not constitute investment advice.
