Investment landscape of raw material concept stocks under the interest rate cut cycle: Opportunities in 2025 and outlook for 2026

From the end of 2024 to early 2025, central banks worldwide are initiating a cycle of interest rate cuts, creating unprecedented investment opportunities in commodity-related stocks. In recent years, high interest rate environments and China’s economic slowdown have shifted many investors’ focus to other sectors, but the situation is quietly changing. China’s ongoing economic policies and the global shift into a rate-cutting era have made commodity concept stocks—beneficiaries of low-interest environments—again a market focus. This article will analyze the investment mechanisms of commodity concept stocks, specific stock recommendations, and seven key indicators investors should watch.

Understanding Commodity Concept Stocks: Definition and Investment Logic

What exactly are commodity concept stocks? Before exploring specific strategies, we must understand the nature of this asset class.

Commodities refer to “products that naturally exist and require minimal processing,” including basic agricultural, forestry, fishery, and livestock products, as well as mineral resources and oil. Commodity concept stocks are listed companies involved in mining, extraction, and refining of these raw materials.

For example, Brazil’s Vale is one of the world’s largest iron ore producers; investing in its stock is equivalent to investing in the iron ore raw material sector. ExxonMobil (XOM), as a giant in oil energy, represents investment opportunities in the oil raw material industry. These companies convert natural raw materials into commercially valuable products, and their stock performance is closely linked to raw material prices and market supply-demand dynamics.

Choosing commodity concept stocks instead of direct raw material spot investments offers advantages such as stable dividend mechanisms, corporate profit reflection of future trends, and risk mitigation against capital market fluctuations.

Practical Deployment of U.S. Commodity Stocks

The most representative commodity concept stocks are listed in the U.S. stock market, exhibiting diverse investment characteristics and growth potential.

SPDR Materials Select Sector ETF (XLB): The Preferred Diversified Portfolio

This ETF covers major U.S. commodity companies across sectors like chemicals, metals, petrochemicals, plastics, and building materials. Looking at its performance from 2025 onward, the Trump administration’s infrastructure investment plans and the interest rate cut cycle have significantly lowered corporate financing costs, benefiting heavy-asset commodity stocks.

Gold, a traditional safe-haven asset, continues to see rising demand. In a low-interest environment, bond values decline, prompting investors to shift toward gold holdings, which is bullish for gold prices. Additionally, geopolitical tensions increase U.S. companies’ procurement of domestic products, and current valuations of commodity stocks are relatively reasonable with moderate P/E ratios, making them attractive investments.

ExxonMobil (XOM): The Path of Transformation for an Energy Giant

As the largest oil company in the U.S., ExxonMobil is actively upgrading its industry. Between 2026 and 2030, the company plans to invest $28-33 billion annually to increase natural gas production and reduce traditional oil extraction costs.

Despite tightening global environmental regulations, policies supporting traditional energy from the Trump administration have created new growth space for such companies. Against this backdrop, ExxonMobil’s transformation is expected to accelerate, with its profit performance in 2025 already reflecting this trend.

SPDR Energy Sector ETF (XLE): A Portfolio of Oil Industry

For investors concerned about risks from individual oil companies, energy sector ETFs offer a diversified approach. XLE includes major U.S. oil firms and related companies involved in refining, storage, and energy equipment, providing broad industry exposure.

In 2025, the oil industry has shown relatively stable performance without significant volatility. However, the cost advantages brought by interest rate cuts for heavy-asset companies remain important, making energy ETFs attractive for long-term allocation.

BHP: Turning Opportunities for a Mining Leader

BHP, the world’s largest mining company, has underperformed over the past two years. Despite global stock markets soaring due to AI demand, BHP’s stock price has not kept pace, mainly due to China’s economic slowdown reducing copper and iron ore prices and rising shipping costs squeezing profits.

However, the situation has improved in 2025. China has launched multiple economic stimulus policies, and AI development has driven electricity demand sharply higher, which is bullish for copper demand. Industry discussions about a potential “copper shortage” have emerged, and BHP, holding large copper reserves, is poised to benefit from this super cycle.

Taiwan Stock Market Commodity Concept Stocks: In-Depth Local Opportunities

Taiwan’s stock market also features quality commodity-related stocks with unique cost advantages and market positioning.

Asia Cement (1102.TW): The Profit King of Cost Control

In recent years, the global cement industry suffered profit declines due to China’s real estate downturn, but Asia Cement maintained relatively stable profits, outperforming Taiwan Cement and other peers.

Asia Cement’s competitive edge lies in meticulous cost management. Its main costs are coal and fuel; the company has diversified operations, signed long-term contracts with Taiwan Power Company, reached supply agreements with the Chinese government, and invested in shipping companies like Yu Min Shipping to reduce transportation costs, resulting in significantly lower operating costs.

With China’s real estate policies opening up at the end of 2024 and further stimulus in 2025, cement supply remains tight, pushing prices upward. As a leading profit earner in the cement sector, Asia Cement is expected to lead the recovery.

Tung Ho Steel (2006.TW): Stable Profits from H-Beam Demand

Tung Ho Steel is notable for its stock price closely tracking steel market prices. Unlike China Steel, which handles the entire process from iron ore to steel and faces high costs, Tung Ho mainly recycles scrap steel and melts it, resulting in lower energy costs and less impact from environmental cost increases.

The company produces H-beams for factories and commercial buildings, with relatively stable demand. Profitability depends mainly on steel prices. In 2025, steel demand has stabilized, but the impact of Trump’s tariffs still needs close monitoring. If companies invest in U.S. manufacturing, it could directly affect Taiwan steel orders.

Seven Key Investment Indicators for Commodity Concept Stocks

Successful investment hinges on mastering key analysis indicators. The following seven are essential reference points:

Indicator 1: Demand Conditions

Agricultural commodities tend to have stable demand unless major natural disasters occur. Industrial commodities like cement, iron ore, and copper depend heavily on China’s infrastructure policies. As the largest importer of raw materials over the past decade, China’s policy direction directly influences global supply-demand and prices. Investors should monitor China’s infrastructure investment trends.

Indicator 2: Supply-Side Changes

During the 2022 Ukraine-Russia war, food and fertilizer prices surged, illustrating supply shocks’ impact. Mining investors should watch environmental regulations, mine safety incidents, and oilfield risks, as these can cause short-term price swings. Oil supply is also affected by OPEC and OPEC+ decisions.

Indicator 3: Logistics Costs

Bulk shipping, especially for iron ore and steel, dominates raw material transportation. The Baltic Dry Index (BDI) is a key indicator for predicting raw material prices. When demand surges, BDI often rises sharply, serving as an important reference for stock investment decisions.

Indicator 4: Geopolitical Environment

Geopolitical factors influence import-export structures and tariffs. While some regions may have cost advantages, policies often impose tariffs to protect local industries. Monitoring tariff changes helps assess cost pressures and pricing power of related companies.

Indicator 5: Regulatory Impact

Global environmental regulations are tightening, increasing compliance costs for high-pollution, energy-intensive industries like steelmaking and petrochemicals. Mining companies also face rising operational costs. Regulatory changes significantly affect profitability and should be incorporated into investment decisions.

Indicator 6: Global Economic Cycle

Precious metals like gold and silver are linked to economic health, with demand driven by jewelry and reserves. Industrial metals like copper and iron ore correlate with economic growth. During expansion, demand and prices tend to rise, but exceptions exist, such as the boom in nickel demand from electric vehicle development, which led to oversupply and price drops. Balancing supply and demand capacity is crucial.

Indicator 7: Interest Rate Trends

Interest rates directly impact gold prices. Quantitative easing (QE) policies increase liquidity, reducing the purchasing power of cash and prompting central banks to diversify reserves into gold. Basel III classifies gold as a Tier 1 asset, encouraging institutional purchases. Despite recent QT measures, economic weakness and rising debt risks have increased gold’s safe-haven appeal. Generally, QE and rate cuts favor gold, while tightening policies are bearish.

Why Hold Commodity Concept Stocks Long-Term?

Compared to direct raw material investments, stocks offer three main advantages:

First, profit distribution and dividends are more suitable for long-term holding. Raw material prices are often regulated or influenced by capital flows, making short-term trading more appropriate. Holding stocks allows regular dividends and more stable returns, suitable for long-term asset allocation.

Second, stock prices often anticipate future positives. Price movements in commodities can be slow, but when positive trends emerge, related stocks tend to react early, enabling timely investment.

Third, it reduces capital market manipulation and short squeeze risks. History shows that commodity prices can be manipulated by capital flows, causing sharp rises or crashes unrelated to fundamentals. Direct investment faces higher risks, while stocks can significantly lower this exposure.

For investors seeking steady long-term returns, selecting quality commodity stocks for portfolio allocation is a wise way to participate in the global commodities wave. In a low-interest-rate environment combined with global economic restructuring, the value of commodity concept stocks is re-emerging, warranting long-term attention and strategic positioning.