At the beginning of 2026, the commodity market has demonstrated a clear pattern of sector rotation: precious metals led the gains initially, followed by a strong performance in industrial metals, while the energy and chemical sectors started to rise from lower levels. The market is currently transitioning from a broad-based rally to a phase of structural differentiation, with capital gradually shifting towards sectors with lower valuations and solid fundamentals.
A key characteristic of the recent period is the divergence between old and new economy commodities. The global commodity market has experienced significant volatility, with substantial adjustments observed in precious metals, non-ferrous metals, and the energy and chemical sectors. This divergence has fundamentally altered the logic behind sector rotation. While past commodity bull markets often featured broad-based gains and synchronized cycles, the current market is characterized by structural differentiation. This shift is driven by the global push for carbon neutrality, which is accelerating energy restructuring and boosting demand for "green metals" such as copper, lithium, nickel, and rare earths. However, exploration and development of these resources are severely inadequate, with capacity expansion cycles lasting 5 to 10 years.
From a macroeconomic perspective, the current global economy resembles a recovery phase rather than an overheating phase. The strong performance of commodities is primarily driven by demand growth fueled by the AI technological revolution, rather than traditional economic overheating. A unique aspect of this commodity cycle is the price revaluation of commodities driven by a declining US dollar index amid a backdrop of de-dollarization.
The transmission mechanism of this commodity rotation has also undergone significant changes. Global supply chains are shifting from globalization prioritizing efficiency to regionalization emphasizing security. Policies in resource-producing countries have become a dominant factor in pricing. Examples include Indonesia's常态化 restrictions on nickel and tin ore exports, frequent adjustments to copper policies in Chile, and lithium nationalization efforts in Bolivia and Ecuador. These factors are altering traditional supply-demand dynamics.
Concurrently, the relocation of Chinese processing capacity to Southeast Asia and the Middle East, along with efforts in Europe and the US to promote local manufacturing, are creating regional supply-demand closed loops. This makes price fluctuations more independent and regional, exacerbating short-term supply-demand mismatches and amplifying price volatility. For instance, the over 30% monthly gain in LME copper futures prices in January 2026 exemplifies this new characteristic.
Regarding precious metals, the sharp fluctuations in gold and silver prices before the Lunar New Year are seen more as a correction following previous rapid increases rather than a reversal of the long-term trend. The long-term upward logic for gold and silver remains intact within the context of de-dollarization.
Market participants emphasize that in the current environment, investors should focus more on the fundamental differences between commodities to capture structural opportunities. The transmission mechanism for resource commodities has undergone a qualitative change, and only by deeply understanding these new dynamics can one seize opportunities in the new commodity cycle.
A paradigm shift is evident when examining the evolution of the global commodity market over the past 30 years. While past major bull cycles shared some common features, their core drivers and paths have profoundly changed with the times. The current cycle, led by precious metals and some strategic metals, is not driven by strong global economic growth. Instead, it is fueled by multiple structural narratives against a backdrop of sluggish economic growth and relatively weak traditional industrial demand. This has resulted in a cycle distinctly characterized by the dual drivers of "financial attributes" and "strategic attributes," with capital flows showing high selectivity and focus rather than the broad-based rotation seen historically.
The sequence of sector rotation has also changed. In typical demand-driven bull markets, the classic sequence often started with energy, followed by industrial metals, then precious metals as inflation pressures emerged, and finally agricultural products. However, the current cycle began with gold breaking out of a multi-decade consolidation range, driven not by cyclical inflation but by deeper factors like geopolitical risk premium reassessment, accelerated diversification of central bank reserves, and long-term concerns about fiscal discipline in major reserve currency countries. Capital has not broadly diffused to energy or agricultural products but has highly concentrated on a few non-ferrous metals tied to the "green transition" and "strategic autonomy" narratives, such as copper and aluminum.
The current commodity cycle shows some similarities to the 1970s but is叠加 with new variables from the new era. The core similarity lies in the restructuring of the global monetary system and ongoing global supply chain turbulence, where precious metals play a key role. A core difference is that inflation in the 1970s was persistently high, whereas current inflation is more structural, though both periods feature high inflation volatility. The current commodity rotation is in the mid-phase of a long cycle, distinctly different from traditional inventory cycles, exhibiting structural, phased, and policy-driven characteristics.
This cycle can be referenced against the "stagflation + geopolitical conflict" features of the 1970s but is additionally叠加 with the variables of energy transition and weakening US dollar credibility. The similarity is that both are in the depression phase of the Kondratiev cycle, with commodity prices showing a wave-like pattern of "surge, pullback, and rise again" under the dual effects of supply shocks and monetary easing. The difference is that the 1970s cycle was dominated by "industrial demand + oil crisis," whereas the current cycle sees new drivers like AI infrastructure and green transition replacing traditional real estate and infrastructure as the main demand drivers.
Increased differentiation is the most notable feature of this rotation. This stems from two core differences: first, the divergence in sector logic, where precious metals and non-ferrous metals show a clear divergence from sectors tied to the domestic economic cycle dominated by the real estate cycle; second, the difference in品种 logic within sectors, where precious metals imply strong expectations amid perceived reduced Fed independence, while oil prices are suppressed by factors like trade tensions and inflation uncertainty, lagging in performance.
The rotation path of this cycle has broken traditional patterns. The traditional chain was gold → copper → oil → agricultural products, following the sequence of demand recovery. The new chain is gold → new energy metals → power infrastructure metals → strategic minor metals.
This round of strength in precious and non-ferrous metals is the result of the共振 of three factors: the global debt crisis, geopolitics, and structural demand from the new energy and AI revolution. Meanwhile, varieties related to traditional economic growth engines remain relatively weak.
However, the chemical sector is值得期待 in 2026. With the implementation of domestic "anti-involution" policies, capacity退出 in Europe, Japan, and South Korea, and the transmission of crude oil costs, chemical products are expected to benefit from cost pass-through and supply optimization. Varieties with limited new capacity and strong export expectations will perform more prominently. For ferrous metals, although demand is marginally slowing, supply-side constraints will also lead to improved supply-demand balance for finished products and valuation repair for leading companies.
In the short term, two signals warrant close attention: first, the persistence of geopolitical games' impact on energy prices; second, the rotation opportunities in ferrous metals, chemicals, agricultural products, and soft commodities after the implementation of domestic policies aimed at expanding domestic demand and "anti-involution."
Looking ahead to the next potential rotation, zinc, wheat, iron ore, and platinum are品种值得重点关注.
Within the transition of global macroeconomic cycles, the rotation of commodity price increases and decreases reflects the complex interplay of economic conditions, policy adjustments, industrial changes, and global trade patterns. Corresponding to the "recovery-prosperity-stagflation-recession" economic cycle, commodity rotation also exhibits clear phased characteristics, driven by the regular switching of different pricing factors.
During economic recovery, ferrous and non-ferrous metals typically lead the rise, driven by demand-side improvements, while agricultural products show分化, with staple items like grains remaining relatively stable. In the prosperity phase, energy and industrial metals lead the gains, and agricultural prices rise influenced by "inflation transmission + rising planting costs." During stagflation, commodities整体分化, with anti-inflation assets like gold and oil outperforming, while industrial demand weakens and agricultural products, affected by supply-side weather and planting factors, perform stronger than industrial goods. In the recession phase, commodities整体 weaken, with industrial goods leading the decline, while safe-haven gold is relatively resilient, and essential agricultural消费品 like oils and grains fall less than industrial goods.
Varieties highly sensitive to interest rates, such as precious metals and industrial metal copper, adjust first when rates rise, as higher rates increase their carrying costs. Agricultural products and energy, with stronger demand rigidity, are less affected in the short term by interest rate fluctuations compared to supply-demand fundamentals.
Interest rate hikes increase funding costs, exerting greater pressure on industrial goods than agricultural products. A stronger US dollar weighs more heavily on internationally priced varieties like non-ferrous metals and oil, while domestically priced ferrous metals are relatively resilient. When inflation expectations rise, precious metal prices react first, followed by industrial goods prices as real demand recovers, with agricultural prices catching up last due to cost transmission and supply-demand adjustments. The more sensitive a variety is, the quicker it tends to react to market signals.
The rotation logic for industrial goods and agricultural products is fundamentally different. Industrial goods are primarily driven by industrial demand, inventory replenishment cycles, and economic cycles, significantly influenced by policy stimulus and global industrial recovery. Agricultural products are dominated by supply-demand gaps, weather, and planting cycles, exhibiting stronger seasonality and rigidity, with lower correlation to economic cycles.
Regarding the internal transmission mechanism within industrial goods, ferrous metals like steel and coal are highly correlated with infrastructure investment and the real estate cycle. The price transmission path is policy stimulus → infrastructure investment → steel demand → coal prices. Non-ferrous metals like copper and aluminum are driven by global manufacturing PMI and new energy demand. The path is economic recovery expectations → manufacturing orders → copper/aluminum inventory destocking → price increases. Chemical products have strong linkage with crude oil prices. The path is crude oil costs → profitability of petrochemical products → adjustments in operating rates → supply-demand balance.
Ferrous metals act as leading indicators. Recovering demand from infrastructure and real estate first drives up prices for steel, coking coal, and coke, which then transmits to demand for chemical raw materials. Non-ferrous metals follow suit with global industrial recovery and rising new energy demand. Crude oil, as a basic energy source, transmits its price fluctuations comprehensively to upstream and downstream chemical raw materials and industrial cost ends, creating industry-wide linkage.
In the context of globalization, industrial chain specialization has also profoundly reshaped the path of commodity rotation. As the core global demand center for industrial goods, China's infrastructure, real estate, and manufacturing sectors dominate the rotation rhythm of ferrous metals and some chemicals. The development of the new energy industry has reshaped the demand structure for non-ferrous varieties like lithium and copper. The pace of capacity release in resource-producing countries determines supply-side constraints for international commodities. Capacity expansion or contraction in varieties like oil and iron ore directly affects their rotation amplitude and persistence. The regional restructuring of industrial chains exacerbates regional supply-demand mismatches, causing some commodity rotations to no longer simply follow the global economic cycle but instead exhibit characteristics dominated by regional demand. Changes in shipping and trade policies further amplify regional differences in commodity rotation.
Recent commodity market trends show significant divergence, leading to debate over whether the market is in a "pause within a rebound" or the "final stage of topping out." The fundamental logic behind commodity price movements is global economic growth. Since 1982, the seven rounds of global economic expansion and contraction have corresponded to seven rounds of commodity price fluctuations. The strength of the US economy and its policies directly determine global economic strength, thereby influencing commodity prices. Historically, phases of accelerated globalization, quantitative easing, and fiscal monetization have driven significant commodity price increases, while the subprime crisis led to sharp declines.
The inventory cycle was once an effective tool for judging commodity market fluctuations, but since 2020, counter-cyclical policies in various countries have smoothed short-term cycles, reducing its effectiveness for price prediction. The application of indicators like跨品种价差 and term structure needs to be based on a broadly rising commodity market; the current market should rather follow a "强者恒强" approach.
From an industrial transformation perspective, commodity differentiation stems from the shift in economic drivers: demand for varieties related to traditional infrastructure and real estate, such as steel and glass, is slowing, while prices for metals like copper, aluminum, and lithium carbonate, driven by new energy and AI, are strengthening, forming a K-shaped structure.
Regarding market risks, the logic behind the rise in precious and non-ferrous metal prices stems from the interest rate cut cycle, geopolitical risks, resource competition, and technological revolution. One must be vigilant about adjustment risks if this logic is disproven. The weakness in ferrous metals and agricultural sectors is influenced by factors like low capacity utilization, oil surplus, and expectations of bumper harvests. Potential upside opportunities may come from variables like policy stimulus, capacity退出, geopolitical conflicts, or extreme weather.
Upside risks for prices of copper, aluminum, etc., concentrate on strategic reserve plans, policy changes in resource countries, and supply chain disruptions. Current prices have largely reflected "de-dollarization" expectations. Statements from the Fed and easing geopolitical tensions could also pressure precious metal prices. The trend of gold and silver is expected to lead market direction. The sustainability of the "de-dollarization" narrative and geopolitical situations involving the US, Iran, Cuba, and others are key focuses for the future.
Regarding investment strategy, it is advised to maintain rationality and avoid being swept up by market sentiment. Technical traders need strict position control and stop-loss/profit-taking measures, while fundamental traders should balance valuation and momentum drivers. The current commodity market has broken from traditional paradigms, requiring differentiated views on the investment logic of different varieties.
Looking forward, the commodity market is expected to be dominated by differentiation, with weakened rotation effects. Strategically important resources with high import dependence and global pricing, such as gold, silver, copper, and tin, are likely to exhibit a pattern of being easier to rise than fall. Varieties dominated by domestic supply, such as steel, chemicals, and building materials, still face weak demand.