The global commodity market in 2024 has witnessed a unique rollercoaster effectPrices experienced an initial surge before succumbing to a downward trend, showcasing the complex interplay of various economic factorsA clear divide emerged between different commodity categories, with non-ferrous metals enjoying a steady climb, while ferrous metals continued their downward trajectory from 2023.

Recent data from the National Bureau of Statistics revealed that prices for non-ferrous metal materials and wires increased by 7.1% year-on-year, in stark contrast to ferrous metals, which faced a decline of 4.3%. The China Bulk Commodity Price Index (CBPI) supported this trend, indicating that by December 2024, prices for non-ferrous metals had surged by 6.8% compared to January, while ferrous metals plummeted by 10.9% during the same period.

According to Zeng Ning, the Deputy Director of CITIC Futures Research Institute, the ferrous metal market performed disappointingly in 2024, with prices dropping by over ten percent throughout the year

Meanwhile, non-ferrous metals displayed initial strength but later experienced significant volatilityThis divergence in commodity pricing can largely be attributed to shifts in domestic and global macroeconomic landscapes and changing industrial patterns.

The demand for ferrous metals, particularly steel, has been tepidZeng pointed out that the steel demand has hit a plateau, where improvements in external demand have merely countered the decline in domestic demandThe construction sector has been the biggest drag on this demandThe recovery of steel demand hinges on the stabilization of the real estate market.

Starting in September 2024, the government rolled out a comprehensive set of measures to stabilize and boost the economyZeng interpreted this policy perspective as prioritizing price rather than volume, advocating for a shift from investment to consumptionUnlike previous economic downturns that focused on stimulating the real estate and infrastructure sectors directly through investment, this current policy approach emphasizes the importance of stabilizing the stock and housing markets to secure residents' financial health.

He further elaborated that this recovery in the real estate sector, rather than being the catalyst for economic revival, is likely to be a byproduct

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The controlled increment in real estate pricing could provide a degree of cyclical repair without necessarily spurring physical demand; as such, until at least the next year, real estate could continue to drag down overall commodity demand.

Looking ahead to 2025, Zeng anticipated that ferrous metal demand would remain weak due to an increase in raw material supply, consequently putting continued pressure on pricesHowever, policy measures may provide a cushion, leading to a broader fluctuation in market conditions.

Wang Guoqing, the Director of the Lange Steel Research Center, echoed these sentiments, predicting that a rise in global protectionism would complicate China’s steel exports further in 2025. He projected a decline in steel exports, albeit at elevated levels, estimating figures between 80 to 100 million tons.

On the raw materials side, as steel production declines, the output from blast furnaces remains constrained

This presents opportunities for moderated demand for coking coal, while stable coking coal imports ensure sufficient supply, thus reducing cost supportCoking coal supply and demand are likely to maintain a relatively relaxed equilibrium through 2025.

From a supply-side perspective, the steel industry will still face much uncertainty in 2025, alongside weak domestic demand, low profits, and ongoing capacity management policies that could restrict productionWang predicted a slight decrease in crude steel output, while the decline in real estate investment may alleviate some demand pressure on steel consumptionHowever, overall steel demand is still expected to be under slight pressure due to export challenges.

In stark contrast, the non-ferrous metal market suggests potential for upward trendsZeng pointed out that recent years have seen a significant transformation in energy sectors significantly affecting non-ferrous metals

Investment in manufacturing, electric vehicles, renewable energy, artificial intelligence, and power grid expansions has created robust demand for non-ferrous commodities, resulting in their notable performance in 2024.

With the ongoing increase in demand for non-ferrous metals—spurred largely by renewable energy sectors and newer technologies—there is considerable room for growthZeng anticipates that the demand for copper, aluminum, and other restricted supply metals may continue to ascend in the context of a gradually recovering global economyHowever, battery metals, which see substantial supply increases, are likely to face heavier pressure.

Wang Hongying, Director of the Chinese (Hong Kong) Financial Derivatives Investment Research Institute, noted that sectors such as 5G infrastructure and electric vehicles are rapidly driving up demand for non-ferrous metals