The Shift to a Multipolar World and What It Means for Commodities

For most of my working life the commodity world had one centre of gravity. Prices were set in London and New York, trade was settled in dollars, and the big consuming economies sat in the West. I have spent fifty years inside the copper industry, much of it in China, and I can say plainly that this arrangement is ending. We are moving into a multipolar world, and the people who understand what that does to physical markets will be better placed than those still reading the old map.

What I mean by multipolar

A multipolar world is one in which no single power sets the rules for everyone else. China, Russia, India, the Gulf states and the wider BRICS group now trade with each other on their own terms, increasingly in their own currencies, and increasingly outside the institutions built after 1945. The United States and Europe remain important, but they no longer decide alone where the marginal tonne of copper, barrel of oil or cargo of grain goes.

This is not a forecast. It is already visible in the trade data, in the settlement of oil in yuan and roubles, in the growth of the Shanghai exchanges, and in the meetings between Beijing, Moscow and Tehran that I have written about in the Brief. What is still ahead of us is the full consequence of it for commodity markets.

Demand moves east, and stays there

Take copper, the metal I know best. China consumes more than half of the world’s refined copper, and the countries now industrialising fastest sit in Asia, the Middle East and parts of Africa. These are the economies building grids, railways, data centres and housing. Western demand, by contrast, is mature and in many sectors declining. When I look at where the next decade of copper demand comes from, very little of it is in the economies that still set the benchmark price.

That gap between where demand sits and where price is discovered cannot last. Over time the price that matters for physical copper will be the one in Shanghai, not London. I have watched the same shift happen in iron ore and it is now under way in the base metals.

Supply chains rebuilt for security, not cost

For thirty years the organising principle of global supply chains was the lowest landed cost. Sanctions, export controls and the weaponisation of the dollar have changed that. Governments and companies now ask a different question: can I still get this material if the political weather turns? The answer, in many cases, is to hold more inventory, to source from friendly jurisdictions even at a higher price, and to build processing capacity at home.

Every one of those decisions adds cost and adds demand. Strategic stockpiles of copper, nickel, rare earths and grain take material out of the market that would once have been available to the highest bidder. Duplicated smelting and refining capacity means more capital spent for the same output. None of this is efficient, and none of it is going to reverse while the geopolitical temperature stays where it is.

The currency question

The dollar will not disappear from commodity trade, but its monopoly is over. When Saudi Arabia accepts yuan for oil, when Russia sells to India in rupees and roubles, and when the BRICS payment systems handle a growing share of settlement, the dollar price of a commodity becomes one price among several. That matters for anyone holding dollar assets, and it matters for central banks, which is why they have been buying gold at a pace I have not seen in my career.

It also removes one of the quiet subsidies Western consumers enjoyed. For decades, the rest of the world’s need for dollars to buy raw materials supported the currency and held down the real cost of imports. As that need falls away, the United States and Europe will pay more, in their own money, for the materials they do not produce.

What this means for the commodity cycle

I want to be careful here, because the easy conclusion is that prices simply go up. They will, over the long run, but the path will be violent. My reading of the long cycles is that 2026 marks a peak, that a recessionary period follows, and that the real inflationary surge in commodities comes between 2028 and 2032. A multipolar world raises the floor under prices through resilience costs, stockpiling and currency fragmentation. It does not abolish the business cycle, and the next downturn will still take copper and oil down with it before the structural forces reassert themselves.

So the practical advice I give clients is this: stop thinking in terms of a single global price and a single global customer. Understand which bloc your material comes from, which bloc it is going to, and which currency the trade is really settled in. Hold more physical inventory than the textbook says you need. And treat the Middle East, Russia and China as the three places where the next price shock will originate, because that is where the power now sits.

I write about these shifts every week in the Simon Hunt Strategic Brief, with the copper data, the China reporting and the Middle East work behind the conclusions. The companion piece on what a multipolar world does to commodity prices goes into the pricing mechanics in more detail.