Commodity markets are under pressure again as trade tensions between the U.S. and China intensify, especially following Donald Trump’s re-election. RBC Capital Markets has analyzed the situation and warns that even if tariffs were fully rolled back a scenario they see as very unlikely the damage already done by disrupted trade relationships and long-term uncertainty would still remain.
Prices of key commodities are already falling from recent highs, and many producers are starting to feel the impact. According to RBC, they use the industry cost curve to estimate risk. This curve shows the cost structure for producing commodities, and prices usually stay around the 90th percentile. If prices fall below that level, production cuts usually follow.
Right now, iron ore would need to fall another 18% to hit its cost support level at $80 per ton. Copper could drop by 24% to $3.15 per pound, and aluminium is about 12% above its support level at $1 per pound. But if the market falls to a more severe level the 75th percentile, which happens only 11% of the time then the declines could be much sharper. Copper could plunge 41% to $2.50 per pound, iron ore could fall 34% to $64 per ton, and aluminium could drop 17% to $0.90 per pound.
These price drops would hit miners’ earnings hard. RBC estimates that earnings across the sector could fall 13% at the 90th percentile level and crash by 37% if prices fall to the 75th percentile.
Some companies are more exposed than others. Base metals producers like Anglo American, Antofagasta, and Norsk Hydro are higher up the cost curve, meaning they’re more at risk. Anglo American and Antofagasta especially are vulnerable since current copper prices are still high compared to support levels. On the other hand, Norsk Hydro is already pricing aluminium near support, so there’s less room to fall.
Coal and platinum group metal producers like Glencore, Anglo American Platinum, and Ecora Resources are better protected. Their products are priced closer to their cost structure, so their earnings should hold up unless there’s a deep economic shock.
The broader market is already reacting. Since the latest trade announcements, the SXPP index has dropped 20%. Companies like Norsk Hydro, Glencore, and Antofagasta have taken heavy hits. For comparison, past crises like the global financial crisis and COVID-19 saw drops of 60–75%, so this downturn may still be in its early stages.
Valuations are under pressure. RBC notes that the sector’s price to NAV and EV/EBITDA multiples have fallen to 0.72x and 4.6x lower than the long-term average but still not at crisis levels, meaning there’s room for more downside.
Not every company is equally prepared. Ecora Resources and Norsk Hydro are considered to be in a strong position due to low capital spending and steady revenue. But others, like Vale S.A. and Antofagasta, could face serious trouble if things get worse. In RBC’s worst-case scenario, some companies could even break debt limits of 3x net debt to EBITDA.
Dividends are also at risk. If the worst happens, Antofagasta could cancel payouts entirely, while Central Asia Metals and Vale S.A. may have to reduce theirs. In contrast, Norsk Hydro, Ecora Resources, and Anglo American Platinum are likely to keep paying dividends.
Some of the stronger companies might take advantage of the downturn. Rio Tinto is already shifting focus toward lithium and could continue buying assets if prices stay low. BHP might be more limited in its moves, while Glencore remains unpredictable, with previous attempts to sell assets delayed by market volatility.
RBC still expects modest U.S. economic growth at around 1% in 2025 and 2026, but warns that rising trade tensions could put heavy pressure on commodity prices and mining firms. Current market values don’t seem to fully reflect the worst-case scenarios, and RBC says the cost curve will remain a key indicator to watch.
