Q&A with Ian Roper, Commodity Strategist, Astris Advisory
Let’s start with an introduction to your role at Astris Advisory.
I’m a global commodity strategist, looking at the markets across base metals, bulks, and new energy on a global basis. I’ve been in in Asia for over 20 years, and very focused on China, and now India a lot more.
I examine the market dynamics, see where we’re going on the demand side, the supply side, and try to predict prices, which, of course, is always a bit of a guessing game, but hopefully I can add some insights at least.
What are some of the big structural trends that you see currently shaping the global commodities markets?
This year we’ve seen a lot of volatility on the policy side of things. Since Trump has come in, we’ve had the trade war, the import tariffs, which started with steel and aluminium, more recently have come on for copper. So that’s one area of volatility.
On the demand side, the Chinese economy has held up really well this year. They did a lot of stimulus in Q4 last year, which we felt the benefits of at the start of 2025. But now there are areas where we’re seeing a bit of a fade coming through, things like construction, especially going into the end of the current five year plan at the end of this year. So, there’s definitely been a front loading of construction activity which is now slowing. But then China has surprised everyone more recently with this anti-involution policy, which has gotten hopes up domestically that it could be a repeat of supply side reforms 2.0? I don’t believe it is, but there are certain aspects which may benefit some commodities.
Lately we’ve seen the China focused commodities like iron ore, lithium, alumina, the ones which are predominantly traded in RMB, have done very well, whereas the base metals have been down over the summer period. Traders in London and New York are not feeling the same positivity, they’re not chasing things to the same degree there.
So it’s an unusual disconnect that we’re sitting at with the markets at the moment. But we’re seeing the dollar coming down again alongside increasing expectations of rate cuts in the US. We’ve seen base metals catch on to this and precious metals have done very well in the last month as well.
We haven’t seen all markets moving together this year. We’ve seen quite a lot of disconnects between different commodities and between different regions as well.
Are there any significant constraints on the supply side and what kind of risk does that pose for the markets?
Copper was taking all the headlines this year. We’ve seen numerous copper disruptions globally, a lot of accidents, disruptions, problems all over Chile, Africa, and elsewhere. These disruptions have certainly contributed to higher copper prices.
But at the same time, it’s a bit surprising that copper prices haven’t been higher. On some days you see disruption news and it has an impact on the market and other days when the markets are quiet or focused on things like currency moves, we’ll get news about mine problems and it does nothing to the copper market. So, copper is the one where there’s been greater than expected disruption this year, but I’d say the pricing impact hasn’t been so great.
In some of the weaker commodities, like lithium and nickel, we’ve obviously seen a lot of supply cuts offsetting where there is growth coming through. So higher cost producers are clearly suffering at these prices.
We’re seeing bankruptcies in the coal markets in North America and Australia where thermal and met coal prices haven’t done as well as hoped. I do think that last year was peak global coal consumption. China’s renewable installations in the last couple of years have been so strong. In the first five months of this year, I think thermal coal burn in power generation in China was running down 3 1/2%. In India as well, solar generation is up 40%. In the first half of the year, wind, hydro, and nuclear have all been up double digits. So, coal burn in India, even with GDP holding up at 8% plus, is actually running down 1 1/2% this year. Those are the two biggest coal consumers in the world.
Then you’ve got the smaller markets that used to dominate coal trading, like Korea, Taiwan, and in Europe in general, where they’re running down double digits as well because of displacement by renewables.
Aside from those market driven disruptions, of course you’re seeing some disruptions for things like copper and iron ore where margins are good, but things just go wrong occasionally, and these have helped contribute extra tightness and higher prices to these markets.
As you mentioned, India is seen as one of the next major growth engines globally. How do you see India’s industrial and infrastructure development influencing commodity demand over the next decade?
It’s been building a lot of momentum. Coming out of the last few years post-Covid, the economic growth has been very strong. Steel demand has been annualizing around a 10% CAGR and base metals demands annualizing more like a 15% CAGR.
There’s a lot of investment going on in India on the infrastructure side. Since Modi came in in the mid-2010s, the government has spent a lot of money on power infrastructure – they’ve had full power supply since the late 2010s. They’ve invested a lot in ports and roads, so it’s become much easier than it used to be to move goods around. Now they’re investing in rail network upgrades, even building a Japanese bullet train network that is partly funded by Japan.
Last year with the general election and a very rough monsoon season, India was a little bit softer. That held things back in the second half of 2024, but they started the year very strongly. The manufacturing PMI in India is running at 17-year highs at the moment. You’ve seen a lot of resilience even with the trade war in the background.
India has been playing a good political game for the last five plus years of being generally friendly with everyone. And they do get a lot of cheap energy from countries that some other countries won’t deal with. That is certainly beneficial for the economy. So, if they have to step away from buying Russian oil at a discount, that could be bad for India from an inflationary standpoint and it could hit growth. Otherwise, the momentum seems solid, the domestic infrastructure investment, FDI, India’s huge population, just seeing incomes coming up to those levels similar to where China was in the early 2000s. We can see those S curves for consumer demand, where income levels are rising and people are starting to buy more consumer goods, cars, etc. So, the fundamentals are good and it should be a nice tailwind for commodity demand globally.
What are some of the risks that could limit India’s ability to grow in the same way that we saw China did years ago?
One of the things that China did benefit from early on in its development is that they had that fixed currency and capital controls, so they didn’t have to worry about currency volatility, whereas that’s something that India does suffer from. In terms of credit, China was mostly self-sufficient on the credit markets and wasn’t too reliant on foreign capital, whereas certainly India’s a bit more subject to those international credit flows, credit markets, global interest rates, inflation rates, etc. that do have a knock on impact on the Indian economy.
Those issues combined with a potential trade war, are the things I’d be most worried about.
You’ve already touched on Trump’s tariffs and the impact that they’ve had globally. What are some of the other major geopolitical issues happening that are impacting the markets?
The recent 232 copper investigation out of the US, was a surprise. The markets were expecting tariffs to be on refined copper and then they weren’t. They were only put on the products. So of course we saw the Comex premium to LME fall extremely sharply.
But what they’ve done on copper, putting tariffs on finished product imports but not on the raw materials for the manufacturers, that sounds sensible in terms of supporting manufacturing jobs. It’s not like the US has spare copper smelters that are going to start producing domestically. So actually that sounds like a more sensible policy than what you’re seeing in aluminium where they’ve just got a blanket tariff that was initially 25% at the start of Trump’s term and then put up to 50%. So then it does raise questions for the aluminium market.
Aluminium consumers in the US are all looking at it and asking why they can’t get the same deal as copper if the goal is to support manufacturing. Aluminium tariffs have been in place for over six months and there have been no smelter restarts in the US, with power availability being a big thing. All the AI data centres have been contracting power, so it’s hard for smelters to get long term power availability at a decent price. Aluminium demand has certainly been suffering with the import tariffs and the higher prices and the impact on consumers. So, there’s certainly a risk that if the aluminium import tariffs in the US were to change in coming weeks or months, the main beneficiaries of that would be Canada, Russia, and China. So maybe there’s a bit of a political angle there depending on Trump’s relationship with those countries, would he want to remove tariffs? Could it be selective or could it be across the board?
If that happens, we could certainly see a bit of restocking on aluminium in the US because inventories there have definitely been drawn down quite significantly. Otherwise economies globally don’t seem to be suffering too much with this trade war.
Growth has been holding up reasonably well in the US, but we are now getting to those long anticipated interest rate cuts. We’ve seen gold and precious metals doing well recently. A view of rates are going to come down, but inflation is going to be allowed to be at higher levels.
What else should be on the lookout for in the coming 12 to 24 months with regards to the commodities markets?
China is coming to the end of the current five year planning period, and the next five year plan starts January 2026. They will have the Congress meeting in October and then we will start to see plans coming through for the next five years on the back of that.
That’s going to be very important for commodities, as they look at what the Chinese economy will look like for the next five years? Obviously, China’s growing incredibly quickly on the green energy side of things. I think they’ve already exceeded the 2030 targets that were set in 2020 for things like renewable energy installation. We’re already over 1.2 terawatts. They’ve done in five years what they were planning to do in 10. EV penetration in China was already above 40% last year. That was the 2030 target previously. So, I’m expecting Xi and the Chinese leadership to say, look, the green economy is going extremely strongly, we have all these technology developments. Let’s keep going, let’s double down.
We might see China having a further uplift in those aggressive green energy targets and EVs. That would be very good to keep the demand going for copper, aluminium, lithium, and all the battery materials. Because that’s been the story of the last five years. There’s been this disconnect where Chinese construction housing markets have been very weak. You’ve seen the demand for things like steel declining every year, whereas battery metals demand is still growing around 5% a year for things like copper and aluminium, and lithium growing at 20/30% a year. So, you’ve got a real disconnect between commodities.
Is that going to continue in China in the next five years? We should start to get more guidance on that in the fourth quarter. For me that’s the key thing that’s coming up and should help keep the demand dynamics positive next year.
