Global commodity markets are expected to experience a period of low prices and oversupply in 2026

Global commodity markets will face oversupply and weak demand in 2026. Analysts at major financial institutions predict stagnation or falling prices for key commodities, from oil and gas to steel and iron ore. The main factors exerting pressure are the slowdown in the global economy, geopolitical uncertainty, and the expansion of production capacity amid limited demand.

Overview

Analysts do not predict significant growth in prices for raw metals. According to World Bank forecasts, the price index for metals and minerals will remain virtually unchanged (+0.3% y/y) after growing by 3% y/y in 2025. Growth in demand linked to investments in renewable energy, electric vehicles, and energy infrastructure will partially offset the negative impact of low production activity and geopolitical uncertainty.

Non-ferrous steel prices are expected to rise by less than 1% y/y after a projected 5% y/y increase in 2025. Copper and tin prices, which are key to clean energy, are forecast to reach new record highs.

The World Bank expects prices for most industrial commodities to fall to pre-pandemic levels in 2026 due to expanded supply and slower global economic growth.

The risks to the baseline commodity price projections are skewed to the downside. A slowdown in global economic growth or in major economies, as well as heightened trade tensions, could negatively affect the already weak global economy.

There are also risks of commodity price increases in the event of new geopolitical or trade tensions, tighter sanctions, or extreme weather events that could disrupt supply chains.

Oil

Morgan Stanley has lowered its oil price forecasts due to the growing surplus in the global oil market. The average price of Brent crude oil in the first three quarters of 2026 is expected to be $57.5, $55, and $57.5 per barrel, compared to $60 per barrel in the previous forecast for these periods. The forecast for the fourth quarter of 2026 and the first half of 2027 remains at $60 per barrel.

JPMorgan analysts forecast average prices for Brent and WTI crude oil for 2026 at $58 and $54 per barrel. Supply growth will be three times higher than demand growth. Both OPEC+ and producers from other countries, particularly North and South America, plan to increase production. Countries outside OPEC+ will account for almost half of the growth in supply. The surplus could peak as early as mid-2026.

The impact of geopolitical factors on oil prices cannot be ruled out, but they can only have a lasting effect on prices in the event of actual production losses, which is very rare.

Natural gas

JPMorgan and Goldman Sachs predict that the average price of gas on the TTF hub will fall to €28.75/MWh and €30/MWh in 2026, which at the current exchange rate means $349–364 per 1,000 cubic meters. Throughout the first half of 2025, gas prices on the TTF remained at €35–40/MWh (with a peak of €58/MWh in February), falling to €27/MWh at the peak of the winter season in December.

The expectation of lower prices is linked to a significant increase in supply. After a long period of limited supply, the liquefied natural gas (LNG) industry will enter a phase of significant new capacity expansion this year. Global LNG production is expected to increase by 7%, or 40 billion cubic meters, which will be the highest figure since 2019.

The main drivers of growth will be the US and Canada, which will account for the lion’s share of new capacity (approximately half of the increase). According to preliminary data, LNG exports from the US in 2025 amounted to 111 million tons (over 153 billion cubic meters after regasification). The main market was Europe. According to S&P Global Energy CERA, in 2025, supplies from the US accounted for 77.5% of European gas imports, compared to 57.6% in 2024.

New facilities are expected to come online in Qatar, Australia, and other countries in the near future. Increased supply could lead to lower price volatility and greater competition among major exporters for consumers.

Steel products

WorldSteel expects global steel demand to grow by 1.3% to 1.77 billion tons. Analysts do not predict a significant improvement in the price situation on the global steel market—at most, a slight recovery, which will be uneven from a geographical point of view.

There are several reasons for these forecasts: geopolitical instability, low global economic growth, high levels of steel exports from China, tariff wars, and rising protectionism. This is holding back the potential for growth in steel prices and demand for steel in many regional markets, putting pressure on local producers (outside China).

«Steel will be a weak market through 2026, as prices are generally soft and supply is ample. TThe only exceptions are electrical steel and niche aircraft steel grades such as 4140. The scope for further price declines is limited, as prices in many regions are close to or even below production costs. The scope for price increases is also limited, as buyers are unable or unwilling to pay for higher costs,» S&P Global noted.

Some improvement in the global steel market is possible if there’s geopolitical stability and China goes ahead with its plans to limit new capacity and steel production, as well as tighter export controls. There could be improvement in a number of Asian markets and in Europe if import access gets tougher and the defense industry grows. The EUROFER association expects apparent steel consumption in the EU to start recovering in 2026, increasing by 3%.

Ukrainian analysts expect a slight recovery in steel product prices. According to NBU estimates, the forecast prices for steel billets for 2026 and 2027 are $490.3/t (+5.1% y/y) and $501.1/t (+2.2% y/y), respectively (on FOB Ukraine terms).

Iron ore

The price trend for iron ore is clearly downward. Demand for steel in China will continue to stagnate, and the launch of the large-scale Simandou project in Guinea is expected to increase supply in the Chinese market by 20 million tons as early as 2026. Starting in January, China will introduce administrative restrictions on exports. If pig iron and steel production in the country declines, this will deprive the iron ore market of a supporting factor that worked in 2025.

The consensus forecast for iron ore prices in China, compiled by GMK Center, indicates a decline in the average annual price to $94. The situation may be relatively favorable in the first half of the year (the “golden season” of March-May) and sharply negative for Ukrainian exports in the second half, when prices may fall to $90.

In December last year, Fitch Ratings raised its forecast for the average price of iron ore in the current year by $5 to $90/t. Demand is expected to remain unchanged over the next two years, while supply will increase by 50–75 million tons.

Coking coal

Average annual prices for coking coal in 2025 on the Australian and Chinese markets fell by 21% and 27%, respectively, indicating weak market conditions and reduced consumer demand, which increased pressure on suppliers.

Fitch Ratings expects average coking coal prices to be $180/t this year and to remain stable until 2028. Although the emergence of new blast furnace steel production capacity in India and Southeast Asia may provide some support for prices, this is not enough to offset the decline in the Chinese real estate market.

Conclusions for the Ukrainian economy

The period of low prices and surplus on global commodity markets expected in 2026 will have a double effect on Ukraine. Cheaper oil and gas will reduce energy import costs, ease inflationary pressures, improve the foreign trade balance, and support the competitiveness of Ukrainian industry. Weak prices for steel and iron ore will limit the growth of export revenues for the iron and steel complex.

Weighing the pros and cons of this situation, we can assume that the iron and steel complex’s losses will be purely virtual, as the industry will benefit from improved competitiveness due to lower energy prices. The iron and steel complex’s gains are unlikely to be significant given the overall military risks in the country.