HSBC’s Commodity “Super-Squeeze” Explained

HSBC’s description of a commodity “super-bull” market is best understood as a super-squeeze: a period in which supply and transport disruptions collide with durable demand, while inventories that normally cushion shocks are depleted. It is not a prediction that every commodity will rise continuously, nor is it the same as the demand-led supercycles of the past. HSBC has explicitly distinguished the current episode as one driven principally by supply disruption. 89

What is creating the squeeze?

The thesis is that several shocks are reinforcing one another across commodity markets rather than affecting only one product.

• Disruption around the Strait of Hormuz threatens flows of oil and liquefied natural gas from the Gulf.
• The Russia–Ukraine war affects energy, grain and fertilizer supply chains.
• Attacks and shipping risks around Bab el-Mandeb raise freight costs and delay cargoes.
• Extreme El Niño conditions can damage agricultural output.

These pressures propagate through the economy. Energy is an input to mining, freight, refining and farm production; diesel and fertilizer costs can, in turn, raise the cost of producing food. Reporting on HSBC’s analysis also cited disruptions affecting refined products, fertilizer, aluminum, helium and other materials beyond crude oil. 34

Why demand has remained resilient

HSBC’s argument is not supply-only. Investment in AI infrastructure requires power, grid equipment and hardware, while broader electrification raises demand for industrial inputs including copper. Those demand sources arrive at a time when new mining capacity can take years to develop, limiting the speed at which supply can respond. 4

That combination matters because it can lift energy, metals and agricultural prices together: expensive energy raises the cost of producing and moving other commodities, while a shortage in one shipping route can disrupt multiple markets at once.

What COCCLES adds—and what it cannot prove

HSBC’s machine-learning commodity-cycle model, COCCLES, is a statistical signal intended to identify changing market regimes. HSBC previously said the model had moved into a “Weak Bull” phase with high probability, while later reporting said it indicated a greater probability of a transition from “weak bull” to “super bull.” 1015

That supports the bank’s broader assessment, but it is not a certainty or a causal explanation. A regime model draws inferences from historical market patterns; a recession, policy change, war outcome or weather shift can change those conditions quickly. The practical takeaway is that COCCLES is one input into the outlook, not proof that a multi-year rally is inevitable.

What copper and the Bloomberg Commodity Index were signaling

Copper’s surge illustrated how tightness can meet a market-specific catalyst. London Metal Exchange copper touched an intraday record of $14,635 a metric ton on September 8, while other reporting put futures briefly above $14,700. Bloomberg attributed the move to tight near-term supply and expectations of US tariffs on refined-copper imports. 3

Meanwhile, the Bloomberg Commodity Index was reported at a 14-year high, signaling that the rally extended beyond a single metal. 5 Still, a broad index high does not mean every commodity has the same fundamentals, and copper’s tariff-related demand pull means its price should not be treated as a pure measure of physical scarcity.

Why inventories can turn a disruption into a price spike

Inventories are the market’s shock absorber. When stocks are ample, traders, refiners and consumers can bridge a temporary outage by drawing from storage. When stocks are running down, a continued shipping interruption or production loss leaves less immediately available supply.

HSBC warned that a prolonged effective closure of Hormuz could push certain markets toward “tipping points” as inventories are depleted. 89 This is the nonlinear risk in the super-squeeze thesis: once buffers are thin, a relatively small additional disruption can prompt outsized price moves because buyers are competing for prompt supply.

Claims about exact “tank-bottom” levels for strategic petroleum stocks or below-target European gas storage should be treated cautiously unless independently documented. They describe possible stress scenarios rather than an established conclusion in the available HSBC reporting.

HSBC’s revised commodity outlook

HSBC raised its forecast for the average increase in commodity prices in 2026 to 22%, from 16% previously. It also changed its 2027 forecast to flat, replacing an earlier expectation of a 7% decline. 4

The revision does not imply a straight-line advance. It indicates that HSBC expected the price level to remain materially higher for longer than it had previously assumed, because the supply shocks and inventory drawdowns were proving more persistent.

What a prolonged rally could mean

A sustained commodity-price rise can complicate disinflation. Higher fuel, transport, fertilizer and raw-material costs can eventually filter into consumer prices and squeeze real household incomes. That environment can make it harder for central banks to reduce interest rates, particularly if inflation expectations rise.

Oil is especially sensitive to the shipping-risk scenario. In an earlier Hormuz-disruption outlook, HSBC raised its 2026 average Brent forecast to $95 a barrel, citing a longer effective closure and associated inventory drawdowns.

For equity markets, the effects would likely be uneven rather than uniformly negative or positive:

• Potential beneficiaries: commodity producers and some energy and materials companies, if higher realized prices outweigh their own cost inflation.
• Potential pressure points: transport, energy-intensive manufacturers and consumer-facing companies, whose margins can be hit by higher fuel and input costs.
• Broader market risk: persistently higher inflation and rates can weigh on valuations, especially for rate-sensitive assets.

The key message in HSBC’s call is therefore conditional: markets can remain vulnerable to sharp upside price moves as long as supply disruptions continue and stockpiles are used to offset them. A restoration of shipping flows, improved production or weaker global demand would reduce that pressure; absent those changes, the super-squeeze framework argues for continued volatility and elevated commodity prices. 48