Commodities Tracker - May 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.

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Past performance is not a guide to future performance.

Nuclear Energy & Uranium (x)

Policy Support, SMR Milestones and Energy Security Drive Nuclear Momentum

• Italy is moving closer to reintroducing nuclear power, with the government aiming to approve enabling legislation by summer 2026 and adopt implementing decrees to establish the legal framework needed to bring nuclear energy back into the country’s energy mix.¹
• TerraPower and Kairos Power breaking ground on the first new U.S. commercial nuclear projects in a decade marks a major step for SMRs, moving them from experimental reactors toward grid-scale commercial power.²
• U.S. regulatory and policy support for nuclear power is accelerating, with the Energy Secretary indicating that the first 5–10 newly planned reactors are likely to receive federal loan backing, potentially supporting a broader wave of new large reactor projects tied to major public-private financing commitments.³
• Uranium spot market activity strengthened in April, with multiple deals completed after the World Nuclear Fuel Cycle conference as buyer sentiment and liquidity improved.⁴
• Stronger equity market activity in April supported Sprott Physical Uranium Trust (SPUT)’s purchase of an additional 300,000 lbs of uranium, and pent-up utility demand added further momentum.⁵
• The prolonged closure of the Strait of Hormuz has disrupted trade and raised energy input costs, particularly across energy-dependent Asia-Pacific, prompting countries in Asia and Africa to accelerate nuclear energy plans, restart reactors, and reconsider post-Fukushima shutdown policies as energy security concerns drive stronger public and policy support for nuclear power.⁶

Base Metals and Copper (x)

Copper Faces Mixed China Demand Signals as Middle East Implications Weigh

• Chinese buying was curbed by elevated copper spot levels, while China’s April activity data, including retail sales, industrial production and fixed-asset investment, came in below expectations, further softening sentiment; however, Chinese copper demand remains supported by grid investment and EV consumption, helping offset continued weakness in the property sector.⁷ ⁸ ⁹
• Potentially higher-for-longer US interest rates could weigh on global growth by keeping financial conditions tighter, creating a more cautious macro backdrop for cyclical base metals which are sensitive to manufacturing demand and risk appetite. ¹⁰
• Ongoing Strait of Hormuz disruptions are rippling through global trade and tightening sulfuric acid supply, which could pressure copper output in Chile and the DRC, given their reliance on acid-intensive SX-EW production, which accounted for 17.2% of refined copper in 2025. ¹¹
• China’s expected May ban on sulfuric acid exports could further restrict market access and deepen potential shortages, increasing downside risk to global copper production, especially in acid-dependent mining regions such as Chile and the DRC.¹²

Gold (x) and Silver (x)

China Demand Remains Solid Despite Macro-Driven Weakness

• China’s central bank added 8t of gold in April, its largest purchase since December 2024 and 18th consecutive monthly increase, lifting official holdings to 2,322t, or 9% of reserves, while non-monetary gold imports also remained strong. ¹³ ¹⁴
• China silver data released in April showed imports hit a record high in March, with volumes more than 2.5 times the 10-year seasonal average, driven by strong demand from the solar industry and rising retail purchases of physical silver. ¹⁵
• Hotter-than-expected US inflation suggested the energy price shock is spreading into broader price pressures, leading markets to rule out Fed rate cuts this year and price in a higher chance of a rate hike; together with a stronger US dollar, this weighed on gold and silver. ¹⁶ ¹⁷
• Gold and silver’s recent weakness may reflect liquidity-driven selling during market stress and pressure from a stronger US dollar, though lower spot levels could attract renewed physical demand from Asian gold buyers and China’s solar-driven silver market.¹⁸
• April global gold ETF inflows were strong and led unexpectedly by Europe, likely reflecting heightened regional concerns over potential Strait of Hormuz disruption.¹⁹

Critical Minerals, Battery Tech & Lithium (x)

Battery Demand Surges as Rare Earth Supply Chain Control Intensifies

• Battery storage systems are emerging as a major incremental source of lithium demand: Europe’s utility-scale battery storage installations more than doubled year-on-year in Q1 2026, while lithium’s demand from battery storage may expand substantially as batteries are viewed as critical infrastructure for renewable integration. ²⁰
• Chinese battery exports surged in Q1 2026, rising 48% year-on-year to nearly $24 billion, partly reflecting demand pulled forward ahead of the April 1 export rebate cut from 9% to 6%, while sharp growth in markets such as Oman and Australia suggests underlying structural demand remains strong. ²¹
• USA Rare Earths’ acquisition of Brazilian miner Serra Verde strengthens its heavy rare earth supply chain and underscores the global push to build an integrated ex-China supply, with the company’s 15-year U.S. government supply deal marking the third recent price-floor arrangement designed to support non-Chinese rare earth production.²²
• Rare earths, particularly heavy elements such as dysprosium, terbium and yttrium, could remain supported despite Trump-Xi talks hinting at a potential extension of the rare earth truce, as China’s export curbs continue to restrict shipments and aggressive procurement from global aerospace firms may further tighten ex-China supply. ²³

Oil (x) and Gas (x)

Lingering Gulf Tensions Sustain Oil and LNG Supply Risks

• A potential US-Iran peace deal could prompt an immediate reaction in oil futures markets, while any substantial rebound in physical oil supply would likely take several weeks to materialise. ²⁴
• Iran is tightening its grip over Strait of Hormuz transit by relying on island-based controls, IRGC patrols, diplomatic clearance channels, vessel screening and occasional safe-passage fees, making a key oil and LNG chokepoint more uncertain and increasing incentives for energy importers to reduce exposure to Hormuz-linked disruption risk. ²⁵
• The UAE’s departure from OPEC would represent a structural shift in oil-market governance, weakening collective supply coordination and increasing the importance of individual producer strategy; with meaningful spare capacity and an incentive to monetise reserves amid uncertain long-term demand, the UAE could play a more independent role in future supply decisions, creating a more bifurcated market backdrop depending on whether regional tensions persist or stabilise.²⁶
• Disruption around Ras Laffan and LNG tanker traffic through the Strait of Hormuz has interrupted a major share of global LNG flows, with Qatar supplying roughly one-fifth of global LNG and most of those volumes exported via Hormuz, while Europe is facing a more difficult storage refill season as tighter LNG availability raises the challenge of rebuilding inventories ahead of winter. ²⁷ ²⁸

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