By Jinjoo Lee

Gone are the days of open trade in commodities. Trade barriers and hoarding -- by governments, traders and even investors -- are the features of today's markets. That is fragmenting commerce and fueling price volatility.

Take copper. After President Trump announced last year that he would impose tariffs on the red metal, traders stockpiled it in the U.S., sending the U.S. price surging much higher than the price in London. At one point last summer, copper futures on the U.S. Comex were 30% pricier than cash copper prices on the London Metal Exchange.

That premium narrowed after Trump unveiled tariffs that were less disruptive than feared -- they applied to semifinished copper products rather than the refined metal. Nevertheless, U.S. copper traded at a premium through the end of last year on lingering tariff concerns. The White House is set to make a decision on whether to levy duties on refined copper later this year. The Supreme Court on Friday struck down many of Trump's tariffs. But that decision doesn't apply to Section 232 tariffs, which were used on metals.

Today, there is no longer a big difference between the U.S. and global benchmarks, but the market remains affected: All of that copper stockpiling in the U.S. left the rest of the world in a deficit, helping prop up the metal's global price this year, according to Natasha Kaneva, head of the global commodities strategy team at JPMorgan.

Similar dynamics played out in silver. Last year, speculation around potential tariffs on the metal sent buyers stocking up on silver in the U.S., taking inventory out of London, where global benchmark prices are set. Thin silver inventories in London have "created conditions for squeezes," according to a Goldman Sachs report. The report noted that 1,000 metric tons of weekly net silver demand has lifted prices by about 7%, rather than 2% as it typically does.

Aluminum prices have risen steadily since Trump imposed 50% duties on the metal in June. Today, U.S. aluminum prices are 57% higher than those in Europe, according to data from Fastmarkets. Prices are high enough that "it must be causing pain to U.S. manufacturers," according to William Adams, head of base metals research at Fastmarkets. U.S. aluminum prices remain elevated despite reports that Trump plans to scale back tariffs on steel and aluminum goods.

A tally from Global Trade Alert shows that there were many more discriminatory trade policies -- including tariffs, export controls and sanctions -- introduced in the five years through 2025 than in the preceding five years. The world's shift to protectionism likely stems "from a succession of shocks," starting with the pandemic-related disruptions of 2020, followed by China's power-market shortage in 2021 and then the food and energy market crises in 2022 after Russia invaded Ukraine, according to the Goldman Sachs report.

As a result, countries have become much more focused on resource security. India, for example, stocked up on rice inventories after the 2022-23 global food crisis. China, which typically consumes about 14 million tons of copper a year, has been buying 1 million to 2 million tons more than its economy needs, according to Tom Price, commodity analyst at Panmure Liberum. The country has also been building up its oil reserves. Earlier this month, the U.S. unveiled a $12 billion critical-minerals stockpile.

One implication of this shift to more protectionism is that it distorts pricing mechanisms in the market, making it "hard to place where the value of a particular commodity is," JPMorgan's Kaneva said. One example: In the third quarter of last year, China kept buying oil "way beyond what they usually consume," Kaneva said, noting that the models analysts use to forecast oil prices "broke down." China filled up on sanctioned oil at hefty discounts last year as it prioritized energy security, a mandate that might grow even more pressing as tensions escalate between Iran and the U.S.

Second, trade barriers push up commodity prices, not only by creating inefficiencies but also by stoking investor appetite. The uncertain global policy environment is leading private investors to buy commodities as an "insurance type" investment, according to Goldman Sachs. This demand from investors has been "supporting the metals rally and further amplifying price volatility," the bank said in its report.

Are there any winners in this fragmented environment? Commodity-trading houses such as Trafigura, Gunvor and Mercuria can profit from volatility, and so can mining companies that are vertically integrated, controlling their own supply chains and distribution, notes Panmure Liberum's Price. Glencore is an example that ticks both boxes: It is a vertically integrated commodity supplier and also a trader.

Another potential beneficiary: mining-services companies that step in with extra crews and equipment when the price of a commodity suddenly spikes. Miners typically bring in third-party crews -- in addition to their own staff and equipment -- when they have to step up production, according to Price. These include Canada's Major Drilling Group International and Australia-listed companies NRW Holdings and Macmahon Holdings.

Besides these few players, though, there aren't many winners when the basic building blocks of the global economy get pricier and more volatile.

Write to Jinjoo Lee at jinjoo.lee@wsj.com

(END) Dow Jones Newswires

February 21, 2026 05:30 ET (10:30 GMT)

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