2025 Annual Results: Marketplace Review

Trade policy and geopolitical tensions were the defining macroeconomic themes of FY2025.

US tariff rates jumped from roughly two percent at the start of 2025 to about 18 percent. Despite the magnitude of this shift, the full inflationary impact on end consumers has so far been moderated. A provisional implementation pause and other delays created a lag that temporarily masked the underlying price pressures.

Our analysis indicates that in the period to September 2025, US consumers absorbed less than 25 percent of the total tariff burden. Instead, US companies mitigated much of the initial cost through margin compression and strategic pre-tariff inventory accumulation. As a result, US consumption, the key driver of the global economy over the past four years, has remained relatively resilient.

However, this dynamic is set to change over the coming year, with the US consumer expected to absorb a greater proportion of tariff-related price increases as existing buffers diminish.

Trade tensions between China and the US heightened over several months, but as at the publication date of this report, the two countries appear to have reached a détente.

Despite this lowering of tensions, China's exports to the US are down by almost a quarter versus the post‑pandemic average. Yet China's overall exports have increased by about six percent year on year, led by a rise in trade to Asia, but also to Africa, Europe and Latin America. The upturn in trade to other regions comes as a direct result of China's strategy of relying on export growth to offset continued domestic consumption weakness.

Turning to commodities, a weaker US dollar, supply disruptions and relatively robust demand kept prices elevated for most of the year.

Oil markets were expected to see large surpluses, but they did not materialise, at least not in the key pricing centres.

Global oil demand was weak, as most participants had forecast. Total global demand growth in 2025 was just under 800,000 barrels per day, a marked decline from the pre-pandemic annual average of just under two million.

The decline has been most pronounced in China, as electric vehicles take an ever-increasing share of new sales. In 2025, electric vehicles accounted for approximately 50 percent of new passenger vehicle sales, representing a significant increase compared to the previous year.

But it is not just in passenger vehicles that this change is occurring. Trucking was long thought to be a more difficult sector to electrify, but new electric vehicles sales in this segment are also rising, and now account for almost a fifth of sales.

This slowdown, plus ongoing declines in most OECD countries, means road fuel is no longer driving global oil demand growth. Instead, demand growth is now coming mainly from consumer goods (petrochemicals) and travel (jet fuel). Still, global oil demand showed pockets of strength this year, especially in distillates.

Refinery outages, especially unplanned ones, and a slow ramp-up in Nigeria's Dangote refinery meant that distillate inventories in the Atlantic Basin have been low all year. This situation has been further impacted by the repeated attacks on Russian oil infrastructure, leading to lower product exports. This tightness has meant refinery margins have been strong for most of the year, putting a floor under crude prices.

The risk of tighter supplies as a result of Russian sanctions provided further support for crude oil, along with the brief but dramatic Israel-Iran conflict earlier in the year. These factors kept crude prices in the USD65-USD70 range for most of the year and created strong backwardation, with buyers paying more for immediate delivery than future barrels.

Finally, China's strategic reserve buying also supported crude prices. While the market expected some buying given the new storage facilities coming online, the scale surprised everyone.

In 2026, supply growth is expected to significantly exceed demand growth. Forecasters are virtually unanimous in projecting record oversupply that could surpass pandemic levels.

Supply is expected to grow by approximately two million barrels per day. Importantly, this growth will be driven in large part by long-lead time projects in Latin America (Guyana, Brazil) and North America (Canada and offshore Gulf), with investment decisions authorised years and, in some cases, decades, ago. Therefore, these projects are unlikely to see curtailed production even in a lower price environment.

The same may not hold true for other producers, especially if inventories start to build early in the year and prices react accordingly. Producers in both the US and OPEC+ may view the situation as untenable and dial back production, which might then lend some support to prices.

The largest wild card in oil markets remains China's strategic buying – if this continues or increases, it will go some way towards addressing the supply overhang, although it is unlikely to resolve it. Conversely, a slowdown would exacerbate the situation.

Copper markets were shaken in 2025 by proposed (but not yet implemented) 25 percent US tariffs, which created a sharp arbitrage between the US COMEX price and global benchmarks. The usual USD50-USD150 per tonne spread ballooned to several thousand dollars, drawing metal from around the world into the US and driving an unprecedented inventory surge. US stocks are now about five times their historical norm – roughly equal to a full year of import needs.

The flow of imports into the US meant that inventories elsewhere did not build as much, or in many markets at all. The diversions have meant that copper prices have remained elevated, at times breaking to record highs.

The copper concentrates market remains tight, with spot treatment charges staying negative all year. At these levels, most smelters operate below break‑even and only those benefitting from strong by‑product revenues – such as acid, gold or silver – can avoid major losses. The market also faced major supply disruptions, including outages at the Kamoa and Grasberg mines (the latter alone accounts for nearly three percent of global output). Despite their scale, total disruptions have remained broadly in line with historical norms.

China's domestic consumption continues to be weak, as the housing market continues to weigh on confidence. But copper demand has been healthy, thanks initially to demand for appliances driven by a trade-in/stimulus programme. Even more important has been China's growth in exports: this increase has resulted in a higher amount of copper contained in export goods. Growth in this area has been so significant that fully 60 percent of all global copper demand growth in 2025 has been in China's exports to emerging markets.

Macro concerns are likely to persist into 2026 as trade tensions remain present even if at a lower level, while there are questions about the durability of US consumer demand and the AI boom. Nonetheless, demand from emerging economies remains healthy and should benefit from lower interest rates and commodity prices, if current projections hold. And structural thematic drivers such as the energy transition, AI expansion and the drive for greater energy, technology and military security all mean commodity demand remains well supported for the coming years.