It’s been a rough decade in the life of a commodities analyst or portfolio manager.
China’s early 20th century growth surge demanded huge volumes of raw materials and drove prices of everything from copper to cement higher. Miners invested heavily in new capacity in response, prices fell, and the comedown has lasted years. It has been a struggle to build strong investment cases for them ever since.
That all changed in 2025.
“[They’re] having their moment in the sun,” says Portfolio Manager Oliver Hextall in this latest podcast.
“We’re very focused on decarbonisation but over the past year a lot of factors have come together. You've seen demand strength on the AI boom. You've seen some of the political decisions in the US administration really change the dynamics around tariffs, which meant that copper has been hoarded in the US. That’s been a big change.”
The impact on commodity prices - and the value of their producers - has been shocking. Gold has doubled in value. Silver and other precious metals have followed. A tonne of copper costs 40 per cent more than it did at the start of 2025.
“There’s been some pretty big moves,” says analyst Laura Stafford, who covers many of the emerging market-based producers affected. “Materials [and] commodities are very sexy now. They weren’t a couple of years ago.”
China’s agenda, of course, has also pivoted. Starting last year, Beijing sought to make more of the dominance it had built in manufacturing and refining. That meant reducing capacity in some areas and driving prices of materials - from rare earths to copper - higher. With geopolitics weighing ever heavier, the West finally looks ready to counter that by building its own supply chains. It will not prove easy.
“Over the past year, people have really woken up to the fact that some of these materials have been taken for granted,” says Hextall. “China has had a lot of foresight in a lot of these areas and has decided from a very early stage to invest heavily in some of these critical areas. The question now is can we have a sort of de-commoditised commodity land where you have Western customers willing to pay a premium for western supply? Maybe moving forward, we have to see governments stepping in and subsidising that production.”
Power up
Further down the supply chain, this is all showing up in higher prices and the most obvious place is in energy costs, says Fidelity Portfolio Manager Ashish Bhardwaj.
““Right now, people are fighting to get electricity,” he says.
“Power demand in the US has been flat for 15 years; now we are seeing roughly two and a half per cent growth per year. That doesn’t sound like much but in a physical market it is a lot.
“What we need to see is investment in all kinds of energy sources. We have been going through an unstable kind of flip-flop in energy policies [in recent years]. That needs to change and that's where we are going to evolve.”
Pockets of value
After the moves of the past year, both Hextall and Bhardwaj are watching valuations carefully. For Bhardwaj, the energy play is one conduit to broaden out AI-linked trades. Rising commodity prices likewise create winners and losers in manufacturing and heavy industry.
“If costs keep going up, there will be a point where companies will have a problem. Right now, they are ok,” says Bhardwaj.
“If you are positioned for the right end market, companies can sell more equipment to these mining companies because they will have to de-bottleneck, look for new mines and so on. But if you are getting hurt by the rising raw material prices, then you have a problem.”
After the bull run, Hextall and Stafford, meanwhile, are looking closely for niches of opportunity, be it in producers who have been left out of the past year’s surge for various reasons, or in areas where they think the commodity in question has further to run.
“We're pretty bullish on uranium as a commodity,” Hextall says. “We think actually that hasn't run as hard as some of the other commodities, despite also having pretty attractive supply demand dynamics. You have to be a believer in nuclear, but we think that [will be] a key driver of green baseload power.”
