Summary of Key Points from the Commodity Outlook Update Industry Overview - The report provides an update on the outlook for energy, metals, bulks, and agricultural commodities for 2026, with a focus on oil, precious metals, aluminium, and EUAs [1] Oil Market Insights - Oil prices are expected to rally to around $70/bbl due to rising geopolitical risks related to Iran and Russia/Ukraine, alongside export disruptions from Kazakhstan, Libya, and Algeria [2] - A moderation in geopolitical risks is anticipated by the second half of 2026, with potential price pressures from a fundamental surplus and political influences ahead of the November 2026 US mid-term elections [2] Precious Metals Forecast - Silver is projected to outperform gold, with expected prices of $100/oz for silver and $5,000/oz for gold [3] - The report suggests that these price levels will provide opportunities for producers and central banks to hedge against price declines [3] Aluminium and Base Metals Outlook - Aluminium is expected to maintain a bullish trend, with a near-term price target of $3,400/t, supported by macroeconomic factors and supply constraints [21] - Copper prices are forecasted to reach $14,000/t in the near term, driven by market momentum and demand expectations [25] - Nickel prices are projected to rise to $20,000/t in the short term but are expected to retreat to $16,000/t over the next 6-12 months due to supply growth and market surplus [28] Natural Gas and LNG - The report anticipates a global LNG oversupply starting in 2027, with average prices projected at $9.5/MMBtu for JKM LNG and $8.8/MMBtu for TTF in 2026 [37] - US natural gas prices may decline further due to strong production, but winter demand remains a factor [37] Agricultural Commodities - Coffee prices are expected to decline to $3.40/lb in 3 months and $3/lb in 12 months due to increasing inventories and favorable crop conditions in Brazil and Vietnam [46] EUAs and Carbon Pricing - EUAs are projected to reach €95/t as policymakers avoid direct intervention in the EU ETS, focusing on support for energy-intensive industries [44] - The EU Commission has expanded the list of eligible sectors for indirect cost compensation, reinforcing the bullish outlook for EUA prices [45] Additional Insights - The report highlights the potential for further inflows into base metals driven by macroeconomic factors and investor sentiment [19] - There is a cautionary note regarding the sustainability of current price levels beyond the first quarter of 2026, with expectations of profit-taking and market corrections [13][14] This summary encapsulates the key insights and forecasts from the commodity outlook update, providing a comprehensive overview of the expected trends and market dynamics across various sectors.

Core Viewpoint - Oil prices declined in early Asian trading due to expectations of a market surplus [1] Group 1 - The decline in oil prices is attributed to the anticipation of an oversupply in the market [1]

Aluminum and Alumina Market Update - The price of alumina has decreased from the highs at the end of 2024 due to resolved supply disruptions, stabilizing around $360 to $370 [3] - China has taken offline approximately 7 million to 10 million annual capacity in the second quarter, contributing to price stabilization [3] - The alumina market is expected to be in surplus for the second half of the year and into 2026, with new capacity coming online from Indonesia and China [3] - Delays in Indonesian smelting capacity are anticipated, which may further contribute to the surplus in the alumina market [3]

Investment Rating - The report does not explicitly provide an investment rating for the lithium industry but indicates a bearish outlook on lithium prices and forecasts [1][2] Core Insights - The lithium market is experiencing a significant surplus, with an estimated surplus of around 6% of total supply for the year [1] - Citi Commodity Team has downgraded their price forecasts for lithium salts and spodumene (SC6) by an average of 13% for CY25, 27% for CY26, and 20% for CY27 [1] - Average selling prices (ASPs) for lithium carbonate (Li2CO3) and lithium hydroxide (LiOH) have shown a downward trend, with current prices at Rmb60.5k/t and Rmb59.2k/t respectively [2] Summary by Sections Market Outlook - The lithium market is building large surpluses, leading to downward pressure on prices [1] - The price for SC6 spodumene has been downgraded to US$600/t from US$700/t [1] Production and Inventory - China's Li2CO3 production increased by 2% week-over-week to 18,462 tons [2] - Total inventory of Li2CO3 reached 134,901 tons, reflecting a 1% increase week-over-week [2] - Inventory levels for downstream players, smelters, and battery makers showed mixed trends, with downstream inventories decreasing by 1% [2]