Commodity markets face “super-squeeze” as supply disruptions drive price surges

Global commodity markets are experiencing a “super-squeeze” characterized by tightening physical supplies and rising prices across energy, agriculture, and metals. The Bloomberg Commodity Index has reached a 14-year high, driven by geopolitical conflicts in the Middle East and the Russia-Ukraine war, alongside El Niño weather patterns and increased demand from AI and electrification.

Copper has reached new all-time highs, with prices trading above $14,700 per ton. This surge is partly attributed to metal draining out of Europe and China toward the United States. While COMEX stocks are at record levels, LME and Shanghai stocks remain relatively low. In the lithium sector, Chinese prices saw a significant decline following a data revision that increased estimates of Chinese lithium stocks.

HSBC economist Paul Bloxham noted that while the worst-case scenarios have been avoided through rapid inventory drawdowns, there are significant upside risks to price forecasts. The team expects commodity prices to remain elevated, with a projected average rise of 22% in 2026.