5 Top Commodities to Watch in 2025

As we progress through 2025, several top commodities are drawing increased attention due to technological advancements, geopolitical shifts, and evolving consumer behaviors.

Understanding these trends is crucial for investors seeking to closely monitor these resources due to their relevance in ongoing shifts in the commodities market.

1. Lithium: Fueling the Electric Revolution

First, the top commodity you need to watch is lithium. Lithium has emerged as a cornerstone in the transition to clean energy. Its primary application in lithium-ion batteries is to power electric vehicles (EVs), energy storage systems, and portable electronics. The global push towards decarbonization and the rapid adoption of EVs contribute to sustained lithium demand.

The main contributing factors are:

• Electric Vehicle Growth: According to some forecasts, major automakers are accelerating their shift to electric mobility, with EVs expected to constitute over 30% of global car sales by 2025.

• Renewable Energy Storage: Integrating solar and wind energy necessitates efficient storage solutions, where lithium-ion batteries play a pivotal role.

• Supply Constraints: Despite its critical importance, lithium supply faces challenges, including geopolitical tensions and environmental concerns, which could impact supply availability and prices.

  
  

2. Copper: The Backbone of Infrastructure and Technology

Copper's exceptional electrical conductivity makes it indispensable in various sectors, including construction, electronics, and renewable energy. The increasing demand for clean energy solutions and advanced technologies has driven a growing industrial need for copper.

Factors contributing to copper's surge include:

• Renewable Energy Projects: Wind turbines, solar panels, and electric vehicle charging stations require substantial copper wiring and components.

• 5G and Digital Infrastructure: The rollout of 5G networks and the expansion of data centres necessitate extensive copper wiring.

• Defence Spending: Modern military technologies, such as advanced weaponry and communication systems, rely heavily on copper.

  
  

3. Crude Oil: Navigating the Energy Transition

While the world pivots towards renewable energy, crude oil remains to play a substantial role in transport, manufacturing, and petrochemicals. However, its demand trajectory is influenced by geopolitical dynamics and the pace of energy transition.

Some of the factors include:

• Emerging Markets: Countries like India are experiencing significant increases in oil demand, driven by industrialization and urbanization.

• Geopolitical Factors: Conflicts and production decisions by major oil-producing nations can lead to price volatility.

• Transition Dynamics: The shift towards electric vehicles and renewable energy may temper long-term oil demand growth.

4. Gold: A Safe Haven Amidst Uncertainty

Market participants commonly use gold as a store of value in times of economic uncertainty. Its role as a store of value and hedge against currency fluctuations makes it highly sought after.

Influencing factors include:

• Inflation Concerns: Persistent inflationary pressures drive investors towards gold to preserve purchasing power.

• Central Bank Policies: Aggressive monetary policies and low-interest rates increase gold's appeal.

• Geopolitical Tensions: Political instability and conflicts elevate gold's status as a safe-haven asset.

  
  

5. Rare Earth Elements: Essential for Technologies

Rare Earth Elements (REEs) are crucial in the production of high-tech devices, including smartphones, electric vehicles, and military equipment. Despite their name, these elements are not rare, however they are challenging to extract and refine.

Important factors are:

• Technological Advancements: The proliferation of smart devices and renewable energy technologies has increased the need for REEs.

• Supply Chain Vulnerabilities: The concentration of REE production in a few countries, particularly China, poses risks to global supply chains.

• Defence Applications: REEs are integral to the development of advanced military technologies, thereby heightening their strategic importance.

  
  

Broader Investment Access Considerations

Common channels used to gain exposure to top commodities include the following, depending on investor profile and objectives:

• Diversified Portfolios: Incorporate a mix of commodities to mitigate risks associated with price volatility and supply chain disruptions.

• ETFs and Mutual Funds: Exchange-traded and mutual funds offer exposure to commodity markets without the complexities of direct investment.

• Direct Investment: For experienced investors, direct investment in commodity futures or the stocks of companies involved in commodity production may offer exposure to commodity price movements, but it also carries volatility and liquidity risks.

• Sustainable Practices: Consider commodities that align with global sustainability trends, such as those used in renewable energy and electric mobility.

  
  

Conclusion

Technological innovations, geopolitical developments, and shifting consumer preferences will shape the commodities landscape in 2025. By understanding the factors driving demand for top commodities like lithium, copper, crude oil, gold, and rare earth elements, investors can gain insight into broader economic and industrial trends in this dynamic market.