⛏️ Copper Hits New Heights on Supply Shock; OPEC+ Holds Steady on Oil (Nov 30 – Dec 6, 2025)

The global Raw Material and Commodity Market during the first week of December 2025 (Nov 30 – Dec 6) was characterized by a sharp dichotomy: industrial metals were aggressively bullish, led by an unprecedented copper supply crisis, while energy and agricultural prices remained subdued or highly managed.

This extreme volatility is vital for Indian manufacturers, including those on The Exporter Hub platform, as the input costs of materials like steel, chemicals, and energy are directly dictated by these global commodity trends.

1. 📈 Copper Price Forecast Rockets to $12,500 on Supply Deficit

The copper market dominated headlines this week, with major financial institutions drastically revising their price forecasts upward, driven by an acute global supply deficit that is expected to persist into 2026.

• Supply Crisis Deepens: The fundamental reason for the surge is the continued disruption at major global mines. Production from the Grasberg Block Cave mine in Indonesia (the world’s second-largest copper mine), which accounts for 70% of its forecasted output, is expected to remain closed until the second quarter of 2026 following a September mudslide. This massive supply shock has created intense tightness in the raw copper concentrate market.

• Price Projections: In light of this, J.P. Morgan Global Research projected that copper prices could reach $12,500 per metric tonne (/mt) in the second quarter of 2026, averaging $12,075/mt for the full year. Copper has already rallied over $\text{20\%}$ since the beginning of the year, reaching a high of $11,200/mt.

• Geographic Inventory Risk: Compounding the issue is the high concentration of refined copper inventory (cathode) in the US, with some reports suggesting up to 90% of global inventory is sitting in US facilities. This concentration stems from a “rush to get copper into the United States ahead of tariffs” earlier this year, creating a unique and fragile market vulnerability that could lead to extreme price volatility.

2. 🛢️ OPEC+ Pauses Output Hikes Amid Oversupply Fears

In the energy sector, OPEC+ (Organization of the Petroleum Exporting Countries and its allies) moved to stabilize the market by adopting a cautious stance on supply.

• Output Pause Announced: On December 1, 2025, the eight OPEC+ countries agreed to pause oil production increases for the first quarter of 2026 (January, February, and March). This decision was made to slow down the alliance’s effort to regain market share and stabilize prices amid fears of a looming global supply glut.

• Oversupply Forecast: This pause is a direct response to research that indicates global balances are shifting rapidly towards a significant oversupply in 2026, driven by robust non-OPEC+ production (e.g., US shale). Rystad Energy forecasts a surplus of 3.75 million barrels per day (bpd) in 2026.

• Price Impact: The decision provided immediate, though modest, support to oil prices, with Brent Crude standing just over $ 63 per barrel. This stability is temporary, as the long-term outlook remains bearish due to the supply growth outside the OPEC+ alliance. For India, a major oil importer, the long-term expectation of lower crude prices provides a significant macroeconomic tailwind for controlling inflation and energy costs.

3. 🏗️ Aluminum Costs Driven by Chinese Power Prices, Not Demand

Aluminum prices showed high stability, even though fundamental demand was not the primary driver. The cost of production, particularly in China, provided a strong floor for prices.

• High Cost Floor: China’s aluminum industry costs were forecast to rise slightly in December due to two key factors: increasing electricity costs in hydropower-dependent provinces as the dry season approaches, and a rise in auxiliary material costs (like prebaked anodes).

• Market Stability: Despite this cost-driven pressure, Chinese domestic aluminum spot prices remained steady around RMB 21,500 per tonne, reflecting a balance between high production costs and a cautious demand outlook due to the country’s economic slowdown.

• Global Context: The LME cash aluminum price was up slightly, showing resilience. This price action indicates that aluminum remains supported by production constraints (like China’s 45 million ton capacity ceiling) and high energy prices, rather than strong import demand.

4. 🌾 Agricultural Market Decline: Driven by Abundant Supply

In sharp contrast to industrial metals, global food commodities showed broad price declines, signaling relief for consumers and providing lower raw material costs for food processing exporters.

• FAO Index Drop: The FAO Food Price Index declined for the third consecutive month in November (released December 5, 2025), dropping 1.2% from October.

• Key Declines: This decrease was led by lower international quotations for dairy products, meat, sugar, and vegetable oils, driven by generally abundant global supplies and intensified competition among exporters. For instance:

  • Sugar prices fell 5.9% due to strong production trends in Brazil, India, and Thailand.

  • Poultry Meat prices dropped amid abundant exportable supplies and Brazil’s efforts to regain market share.

• Cereals Exception: The FAO Cereal Price Index was the only major segment to increase (1.3% rise), mainly due to heightened tensions in the Black Sea region and strong Chinese demand for US supplies, despite a generally comfortable global supply outlook.

Source : www.jpmorgan.com