Commodities Tracker – February Edition

This commentary covers the key takeaways for the listed commodities. Click the (x) next to the sectors to see the respective monthly charts pack.

Marketing Communication. Capital at Risk. For Professional Investors Only.

Past performance is not a guide to future performance.

Nuclear Energy & Uranium (x)

SMRs Fuel-Cycle Tightness Moves to Centre Stage

• Physical uranium pushed higher into the mid 90s USD/lb, with longer-term prices in the high 80s, possibly reflecting a structurally tight fuel cycle rather than a transient squeeze.¹
• US policy continued to advance funding and contracts across conversion and enrichment to reduce dependence on Russian fuel, signalling that public capital may underwrite key front end bottlenecks.²
• Producer guidance from major Kazakh and Canadian suppliers edged lower, reinforcing that mine supply is not ramping quickly and utilities must increasingly secure long‑dated contracts rather than rely on spot.³
• Uranium‑exposed equities across the value chain (Mining, Industrials, Utilities) hit multi‑year highs before mild profit‑taking, consistent with a structurally bullish narrative with some extreme positioning.⁴

Base Metals and Copper (x)

Volatility Exposes Scarcity; Hyperscalers and Majors Signal Upstream Value

• Copper saw a strong rally to new highs before slightly retracing, highlighting the thin liquidity layered on a tight supply outlook whilst demand prospects rise.⁵
• Strength in longer dated contracts suggested the market is repricing medium term scarcity and contracting risk, in line with expectations around electrification, grid build out, and data centre demand.⁶
• Amazon’s offtake‑style agreement with a US copper producer tied to a Rio Tinto venture signalled that hyperscalers are engaging directly with upstream supply, implicitly acknowledging likely copper shortfalls and the strategic nature of the metal.⁷
• Newsflow around a potential Rio Tinto–Glencore merger underlined that diversified miners appear to be actively pursuing high‑quality copper exposure, treating productive copper assets as core and strategic, rather than just cyclical earnings drivers.⁸

Gold (x) & Silver (x)

From All-Time-Highs to Marked De-Grossing Across Precious Metals

• Gold and silver finished the month higher overall despite a sharp end-of-month drawdown, with the sell-off looking more like de-grossing after a strong run rather than a structural break in narrative.⁹
• A weaker USD backdrop driven by higher US real rates while real yields rose elsewhere supported precious metals for most of the month, combined with deficit fundamentals in silver.¹⁰
• Margin hikes on gold and silver futures likely transformed an orderly pullback into a disorderly flush, as higher collateral requirements forced leveraged longs to either post additional cash or cut positions which triggered mechanical selling into thin liquidity and accelerating downside momentum, even as the medium-term case for precious metals hedging remains broadly intact.¹¹
• The late-month sell-off appears consistent with de-grossing of crowded macro and momentum longs rather than fresh fundamental bearish news, suggesting flows rather than macro regime change drove the move.¹²
• Institutional futures positioning in both gold and silver remained relatively light, implying dip-buying capacity may still exist if macro tailwinds re-assert (USD direction, real rates, geopolitical hedging demand).¹³

Critical Minerals, Battery Tech & Lithium (x)

Project Vault Adds Sovereign Demand to a Tightening Complex

• Lithium extended its recovery from 2025 lows, with Chinese carbonate benchmarks jumping toward two‑year highs and signalling a shift from clear surplus toward a more finely balanced 2026–27 market.¹⁴
• Demand expectations stayed anchored in grid‑scale storage, EVs, and rising data‑centre power needs, with battery storage positioned as a key driver of incremental lithium demand through the decade.¹⁵
• Chinese policy again made changes to battery export incentives and plans to expand charging and storage infrastructure, which has pulled forward purchasing, while permit cancellations and earlier mine suspensions in key regions tightened effective supply despite ample nameplate capacity.¹⁶
• The US launched Project Vault, a civilian critical‑minerals stockpile combining a 10 billion USD Export‑Import Bank loan with 1.67 billion USD in private capital to accumulate rare earths and other strategic minerals for manufacturers, effectively creating an SPR‑style buyer of last resort.¹⁷
• The structure lets firms pre‑commit to volumes at set inventory prices, draw during disruptions, and replenish later, embedding a stabilising, quasi‑support mechanism into critical‑minerals markets; rare‑earth and critical‑minerals equities rallied on the policy signal.¹⁸

Oil (x) and Gas (x)

Structural Surplus Caps Oil Prices, While Geopolitics and LNG Infrastructure Drive Volatility

• Oil continued to trade against a clear surplus backdrop, with non‑OPEC supply growth in the Americas and elsewhere outpacing demand and framing 2026 as a year of abundant barrels despite OPEC+ management.¹⁹
• Despite this, prices intermittently pushed into the low‑70s USD/bbl as geopolitical risk premia built, particularly around US actions in Latin America and uncertainty over how producers will respond to persistent non‑OPEC growth.²⁰
• Forward curves and consensus still imply an average closer to the high 50s to low 60s USD/bbl range, reflecting scepticism that geopolitics alone can sustainably offset a “super glut” of new capacity.²¹
• In gas, US benchmarks are supported by the ramp up of LNG export projects and structurally rising power demand, including from data centres, even as a wave of new global liquefaction is set to cap international spot prices and pull incremental demand from Asia and Europe.²²
• The result has been an oil market capped by structural surplus with episodic risk spikes, alongside a gas/LNG market increasingly driven by infrastructure timing and regional demand elasticity rather than headline storage levels.²³

This document is not intended to be, or does not constitute, investment research as defined by the Financial Conduct Authority.