Supply-side tensions are exacerbating backwardation in non-ferrous metals

Expectations of monetary tightening are rising

Published by Luca Sazzini. Oct. 30, 2026 .

Conjunctural Indicators Commodities Financial Week

Stampa

Financial markets for energy commodities showed diverging weekly trends, with oil prices remaining broadly stable while natural gas prices continued to rise.
The oil market remains in a stalemate, which could persist until the US midterm elections. The election results could provide financial market participants with further insights into the Trump administration's next moves towards Iran.

In the European natural gas market, TTF prices exceeded €100/MWh. The increase was mainly driven by QatarEnergy's decision to extend its force majeure clause for several buyers until the end of the year. This news comes against a backdrop already characterised by forecasts of colder temperatures in Europe and low storage levels, factors contributing to mounting upward pressure on the gas market.

The precious metals market was affected by increasingly strong expectations of a more restrictive monetary policy stance, which weighed on safe-haven assets.
In the United States, the Fed left interest rates unchanged, although two FOMC members supported an immediate 25-basis-point increase. Ahead of the December meeting, market expectations point towards another tightening move, amid persistent inflationary pressures.
In Europe, the ECB confirmed interest rates, but expectations of an initial tightening move as early as the December meeting strengthened in response to growing inflationary risks associated with higher energy prices.

In the industrial metals sector, ferrous metal prices remained stable in Europe and declined in China, mainly due to weaker Chinese demand for steel. In the United States, hot-rolled coil prices continued to rise, with CME prices up by almost 44% since the beginning of the year.

Among non-ferrous metals, prices generally moved upwards, driven by several supply-side issues. Zinc recorded the largest weekly increase, following downward revisions to global mine production forecasts for 2026, difficulties faced by smelters in sourcing concentrates and the resulting pressure on processing margins.
Another metal experiencing price increases was copper, whose performance was influenced by the growing concentration of inventories in US warehouses, driven by concerns over potential tariffs on cathode imports. This development reduced availability in the Chinese and European markets, contributing to increased pressure on spot prices.

For the coming months, however, financial markets are pricing in expectations of a partial price correction. Several non-ferrous metals, including zinc, copper, aluminium and molybdenum, currently exhibit a backwardation forward curve, characterised by futures prices below spot prices. This market structure reflects expectations of gradually declining prices over the coming months. Without such expectations, no market participant would have an incentive to agree today to a forward sale at a price below the spot price, while also bearing storage costs and financing expenses until delivery.