I am often asked whether a multipolar world is bullish or bearish for commodities. The honest answer is both, depending on the timescale. Over the long run it pushes prices structurally higher and makes them more volatile. Over the next two or three years, it will not stop the business cycle from doing what it always does. In this piece I want to set out the three mechanisms that raise the floor under prices, and then explain why I still expect a hard downturn before the real surge arrives.
Mechanism one: the resilience premium
When supply chains are built for the lowest cost, there is a single global price and the cheapest producer sets it. When they are built for security, there are several prices. A European buyer who will no longer take Russian material, an American buyer who must avoid Chinese processing, and a Chinese buyer who wants to hold more inventory against sanctions are all paying a premium over what the open market would charge. I see this every day in copper. Cathode that would once have cleared at the London price now carries regional premiums that reflect politics, not metallurgy.
That premium does not go away when demand softens. It is built into the cost of doing business in a fractured world, and it lifts the level at which producers can make money and the level at which consumers have to pay.
Mechanism two: settlement in more than one currency
For fifty years the dollar price was the price. That is changing. Oil is settled in yuan, Russian exports are sold in roubles and rupees, and the BRICS payment systems are carrying a growing share of trade between the countries that now consume most of the world’s raw materials. The dollar price of copper or oil becomes one quote among several, and the gap between them is where the market tells you what it really thinks of each currency.
For Western buyers this is a cost. The world needed dollars to buy commodities, and that demand held the currency up and the real price of imports down. As that support erodes, the dollar price of raw materials has to rise to clear the same physical market. Central banks understand this, which is why they have been buying gold rather than Treasuries.
Mechanism three: strategic stockpiles
Governments are once again treating raw materials as instruments of national security. China has been building reserves of copper, cobalt, nickel and grain for years. The United States is reviving its own stockpiles of critical minerals. Europe is talking about it. Every tonne that goes into a government warehouse is a tonne that is not available to the highest commercial bidder, and unlike commercial inventory it is not released when the price rises.
The effect is to tighten the market permanently at the margin. In a metal like copper, where the marginal tonne already decides the price, that is a powerful force.
Why the cycle still matters
Here is where I part company with the simple bullish story. Structural forces raise the floor, but they do not cancel the cycle. My reading of the long cycles, which I have set out in my piece on the final six years of the 100-year cycle, is that 2026 marks a peak, that a recessionary period follows across much of the world, and that the real inflationary surge in commodities comes between 2028 and 2032. The environment I expect then looks like 1978 to 1982: fiscal and monetary excess, food and fertiliser shortages, weather disruption and a loss of confidence in paper money.
Between now and then, prices will fall. Copper has already run well ahead of what the physical market justifies, and when the recession bites it will give a good deal of that back. The structural floor is higher than it was, but it is a floor, not a trampoline. Anyone who bought the multipolar story at the top of the cycle is going to be tested before they are proved right.
What I tell investors and businesses
Three things. First, separate the structural view from the cyclical one and position for both: the next two years reward patience and liquidity, the years after that reward physical exposure. Second, watch the price gaps between Shanghai, London and New York, and between the dollar quote and the yuan quote, because that is where the shift shows up first. Third, treat supply security as a cost of capital, not an optional extra, because the resilience premium is here to stay.
I go through the copper numbers each month and the China and Middle East developments as they happen in the Simon Hunt Strategic Brief. For the broader picture of how trade and settlement are reorganising, see the shift to a multipolar world and what it means for commodities.
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This article is a summary. Subscribers to the Simon Hunt Strategic Brief get the complete copper data each month, the China and Middle East reports as events unfold, and the scenario work on what each outcome means for oil, rates and metals. Free subscribers get the weekly digest and Simon’s public notes.
