Why are commodity prices going crazy?

Surging commodity prices are providing tremendous support to ASX mining shares as new global trends take hold.

Today, we saw plenty of ASX mining shares hit new 52-week highs as metal and mineral prices lifted again.

Those stocks included iron ore and lithium producer Mineral Resources Ltd (ASX: MIN), lithium pure-play PLS Group Ltd (ASX: PLS), silver miner South32 Ltd (ASX: S32), gold miner Newmont Corporation CDI (ASX: NEM), and aluminium stock Alcoa Corporation CDI (ASX: AAI)

Some commodities have risen by more than 25% and even up to 70% over the past month alone.

What’s pushing commodity values higher?

Strong central bank buying, falling US interest rates, and less faith in the US dollar are supporting safe-haven commodities, gold and silver.

Additionally, after decades of discussion and years of government planning, the green energy transition is well underway.

This is showing up in surging demand for copper and silver, which have high electrical conductivity and other industrial usages.

Silver is used to make solar panels and modern tech devices, and is used in the wiring for electric vehicles (EVs) and data centres.

Lithium prices have been on the rise for six months after three years of global oversupply finally thinned out.

Demand for lithium to power batteries, such as those in EVs, is increasing as the world embraces low-emissions cars.

EVs outsold traditional vehicles for the first time in China last October.

Many nations are also resetting their supply chains after COVID highlighted the need for home-based manufacturing and diversified sources of essential inputs.

US tariffs are partly aimed at encouraging global companies to set up at least some of their manufacturing inside the US.

The US also wants to diversify away from China, which was the impetus behind an $8.5 billion trade deal with Australia last year.

The deal centred around rare earths and other critical minerals essential for mobile phones, rockets, aircraft, and EVs.

Both the US and China are limiting exports to protect home-based manufacturing and limit other nations’ access to critical minerals.

This is changing the global supply/demand dynamic, pushing commodity prices up and benefiting many ASX mining shares.

Additionally, amid growing geopolitical tensions, developed nations are seeking to strengthen their military might.

Last year, NATO made a commitment to increase its defence spending from 2% to 5% of GDP over the next 10 years.

To build ships and military tanks, along with high-tech software for defence applications, a lot of metals and minerals are required.

This is also lifting many commodity values.

Nations incentivise critical minerals producers

Many developed nations, including the US and Australia, have developed critical minerals lists and offered incentives to local producers.

The US added silver to its Critical Minerals List in November.

Other metals and minerals on the list include copper, used in wiring and cables  for decades, but now also in demand for wind turbines.

There is also aluminium, used to build cars, trucks, planes, electrical transmission lines, and machinery.

Antimony is also on the list. It has many industrial and defence uses and is found in lead-acid batteries, bullets, and semiconductors.

Lithium is on the list, as is gallium, used in semiconductors, and indium, used in flat-panel LED TVs and tech gadget touchscreens.   

Platinum, palladium, and rhodium are on the list. They’re used in catalytic converters in low-emission vehicles.

4 commodities up 25% to 70% in a month

Here are four commodities that have surged over the past month, benefitting many ASX mining shares.

Silver

The silver price is up 34% in just one month and up 181% year over year.

Today, analysts at Trading Economics said:

Silver remained above $85 per ounce on Tuesday, hovering near record highs as concerns over the US Federal Reserve’s independence, geopolitical tensions, and renewed trade fears bolstered demand for safe-haven metals.

Investors were also watching escalating protests in Iran, which raised fears of potential US intervention, alongside President Trump’s statements on annexing Greenland.

Lithium

The lithium carbonate price is up 68% in one month and 110% year over year.

On Tuesday, the analysts said “signs of strong demand for power storage coincided with the outlook of capped supply”.

They added:

Chinese authorities lowered export rebates for battery producers from April, driving manufacturers to front-run lithium orders.

In the meantime, ambitious bets in power and datacenter infrastructure by the Chinese government was combined with the announcement of higher power storage spending, supporting the outlook for lithium and other battery metals.

This was combined with Beijing stating it would double EV charging capacity to 180 gigawatts by 2027, supporting lithium-rich energy storage systems.

Platinum

The platinum price is up 27% in a month and up 150% over 12 months.

The surge reflects strong safe-haven demand amid geopolitical tensions in Iran, where unrest has claimed hundreds of lives.

At the same time, slower-than-expected US employment growth in December, despite a resilient unemployment rate, supported expectations of Federal Reserve rate cuts, boosting demand for non-yielding assets like platinum.

Nickel

The nickel price is up 26% in one month and 13% year over year.

Nickel appears to be starting a recovery after a three-year slump created by an explosion in Chinese-backed nickel mining in Indonesia.

The Trading Economics analysts commented:

Improving demand from Chinese stainless steel mills and EV battery producers is supporting the rebound, while traders adjust speculative positions amid ongoing supply uncertainty from Indonesia, the world’s largest nickel producer.

Indonesia had signaled a potential 34% cut in 2026 output, but final quotas remain pending.

Check out the 12 fastest-rising commodities of 2025 here.

The post Why are commodity prices going crazy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Alcoa and South32. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.