Westpac's broad commodities index jumped 17% in 2025, led by a 60% rally in gold, a 30% surge in copper, and a 12% gain in aluminium, according to a Wednesday report.
Iron ore, which was broadly expected to fall, defied expectations, rising 4% to $105 per tonne. The gains were partially offset by losses of 25% in liquefied natural gas (LNG), of 14% in crude oil, and 11% in thermal coal.
The bank expects the broad commodities index to fall just 5% by December 2026, led by a 20% decline in iron ore to $83 per tonne, a 12% fall in LNG, and a 7% fall in crude oil. Despite the fall, its broad commodities index would be 18% higher than the forecast at the end of 2024.
The lender expects a correction in iron ore prices in 2026. The cost of Australian steel-making inputs in China, iron ore and metallurgical coal, continues to rise while Chinese steel prices continue to fall, resulting in the widest gap between the two since mid-2024. Chinese steel production peaked in 2020 and has been trending downwards since then. In October, global steel production output was down 3% in the month and down 6% in the year. Metallurgical coal prices are expected to moderate through 2026.
Gold is expected to retest $4,300 per ounce in early 2026, with scope to approach $4,500 per ounce in the second half of the year.
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