Geopolitical Fragmentation and Deglobalization: Implications for Global Commodity Markets and Pricing Dynamics in Mid-2025

The mid-2025 commodity landscape is evolving under the twin forces of geopolitical fragmentation and deglobalization, reshaping metals and minerals markets with lasting impacts on pricing and supply chains.

Introduction

As the world enters the latter half of 2025, commodity markets are grappling with a transformation driven by escalating geopolitical tensions and pronounced deglobalization trends. These phenomena are fracturing long-established supply chains, particularly in metals and minerals — the essential raw materials underpinning modern industry, infrastructure, and the accelerating energy transition.

This article delves into how these shifts impact global commodity flows and pricing dynamics, with a detailed focus on copper markets as a strategic bellwether. We explore the rising costs and inefficiencies introduced by geopolitical realignments, the strategic stockpiling behavior of nations, and the consequences for investors navigating this complex environment.

Geopolitical Fragmentation and Market Inefficiencies

Global commodity markets have historically thrived on open, efficient supply chains that optimize cost and liquidity. However, according to a leading strategist at TD Securities, this paradigm is now under severe stress. The increasing prioritization of geopolitical allegiance over market efficiency is fragmenting the global raw materials trade, resulting in:

• Reduced market liquidity: As countries impose export controls or prefer allied trading partners, physical and financial market liquidity diminishes, inhibiting price discovery and amplifying volatility.

• Higher transaction and logistical costs: Tariffs, non-tariff barriers, and customs complexities inflate the cost base for producers and consumers alike, eroding margins and increasing end-user prices.

• Localized shortages and price disparities: Fragmented supply increases the risk of regional supply-demand imbalances, undermining the traditional arbitrage mechanisms that equalize prices globally.

• Strategic stockpiling: Nations are actively accumulating reserves of critical metals and minerals, a behavior reminiscent of wartime economies, which further tightens available supply and distorts conventional trading flows.

“We are inching closer to a wartime economy as nations aggressively stockpile resources to insulate themselves from supply shocks,” the TD strategist noted in a recent BNN Bloomberg commentary.

These factors collectively erode traditional efficiencies, forcing commodity prices upward in a feedback loop that can sustain elevated levels over extended periods.

Copper as a Strategic Indicator

Among metals, copper stands out as a crucial indicator of the broader market dynamics at play. Its fundamental role in electrical wiring, construction, and especially electric vehicle (EV) batteries and renewable energy infrastructure makes it a focal point for understanding supply-demand tensions in 2025.

Supply-Side Pressures

Copper mining faces acute challenges:

• Geopolitical risks in key producing countries: Chile and Peru, accounting for approximately 40% of global copper output, have encountered mining disruptions due to social unrest, regulatory changes, and environmental scrutiny, exacerbating supply uncertainties.

• Regulatory and environmental constraints: Stricter permitting policies and sustainability requirements slow project development timelines and increase production costs.

• Trade fragmentation: Export controls and preferential trade arrangements restrict copper flows, exacerbating supply deficits in dependent regions.

Demand Surge

On the demand front, copper consumption continues to accelerate:

• Electric vehicle adoption: The global push toward EVs significantly increases copper demand, given the metal’s extensive use in batteries, motors, and charging infrastructure.

• Renewables and infrastructure investments: Expanding wind, solar, and grid modernization projects further fuel copper consumption.

The combined effect has been notable price appreciation and volatility. Copper futures have surged, reflecting tight market conditions and anticipatory positioning by traders and investors.

“A world in which raw material trade is fragmented by geopolitical allegiance rather than market efficiency necessitates significantly higher raw material prices,” the TD strategist underscored, highlighting copper’s current market as emblematic of this shift.

Strategic Stockpiling and National Resource Security

Governments worldwide are increasingly adopting stockpiling policies to secure critical raw materials amid supply chain uncertainties. This behavior compounds supply tightness:

• Stockpiling motives: Nations seek to mitigate risks of embargoes, export restrictions, or geopolitical conflicts that could disrupt essential imports.

• Scope and scale: Stockpiles cover not only base metals like copper but also rare earth elements, lithium, cobalt, and other minerals vital for technology and defense sectors.

• Market impact: Stockpiling withdraws material from open markets, reducing available supply and increasing price pressure, particularly in already strained commodities.

This trend reflects a broader shift in global trade priorities—away from purely economic considerations toward strategic resilience.

Investor Implications and Strategic Considerations

The evolving commodity landscape presents both challenges and opportunities for investors and market participants:

Thematic Portfolio Positioning

• Energy transition metals: Given their centrality to decarbonization and electrification efforts, metals such as copper, lithium, and cobalt warrant focused exposure.

• Geopolitical risk premiums: Investors must price in elevated risk factors stemming from supply chain fragmentation, political tensions, and trade barriers.

Risk Management Practices

• Supply chain due diligence: Continuous monitoring of geopolitical developments, mining disruptions, and policy shifts is critical to anticipate market shocks.

• Diversification across regions and instruments: Mitigating concentrated geopolitical risks through geographic and product diversification can enhance portfolio resilience.

• Hedging strategies: Utilizing futures, options, and structured products to manage price volatility and liquidity challenges becomes increasingly important.

Market Intelligence and Early Signals

• Tracking stockpiling and policy moves: Surveillance of government reserve policies and import/export regulations can provide early warnings of tightening supply or easing conditions.

• Interpreting price spreads and arbitrage: Increased price dispersion across regions or contract maturities may highlight emerging inefficiencies and trading opportunities.

Conclusion

The mid-2025 commodity markets reflect a new geopolitical reality where traditional global integration yields to regionalized and politically influenced trade flows. This shift drives inefficiencies, higher costs, and elevated commodity prices, particularly in critical metals like copper.

Investors and market participants must adapt by incorporating geopolitical risk assessments into their strategies, focusing on thematic exposure to strategic raw materials, and employing robust risk management frameworks. Navigating this complex nexus of geopolitics and supply chain fragmentation is essential for capitalizing on opportunities and mitigating risks in an increasingly fragmented commodity landscape.

References:

• TD Strategist Commentary, BNN Bloomberg, July 16, 2025: TD strategist says ‘we are inching closer to a wartime economy’ as nations stockpile resources

This article synthesizes expert insights and market observations to provide investors with a clear understanding of the forces shaping commodity markets in mid-2025, emphasizing the importance of strategic adaptation amid geopolitical fragmentation and deglobalization.