Australia’s economy has long been intertwined with the global commodity market, and the latest update from the Reserve Bank of Australia (RBA) provides a clear snapshot of how the country’s export-driven sectors are performing. The RBA Index of Commodity Prices for October 2025 revealed a modest yet positive trend, showing resilience in certain industries while others continue to face pressure from falling global demand and price corrections.
According to the report, the index rose by 2.3% in October 2025 when measured in Special Drawing Rights (SDR) terms, a global unit used to compare international prices on a common scale. This improvement builds on the 1.9% increase recorded in September, signaling gradual momentum in commodity markets. In Australian dollar terms, the index rose slightly higher, at 2.5%, reflecting both improved commodity valuations and currency movements that favored Australian exporters.
However, when viewed on a year-over-year basis, the index still shows a decline of 1.3% in SDR terms, underlining that overall prices remain weaker than they were in late 2024. This decline is significant because it shows that, while short-term fluctuations are positive, the broader trend still reflects the challenges faced by global producers amid shifting demand patterns, geopolitical uncertainty, and the ongoing energy transition.
Non-Rural and Base Metals Drive the Gains
One of the bright spots in October’s data came from the non-rural and base metals sub-indices, which registered healthy growth. These categories benefited from renewed demand for industrial metals, including iron ore, aluminum, and copper. The pickup in prices indicates a rebound in construction and manufacturing activity, particularly in China and Southeast Asia—regions that remain Australia’s key export destinations.
Iron ore continued to play a leading role in supporting Australia’s export revenue. Prices for the steelmaking material remained firm as steel production in China stayed relatively stable. Global inventories are also lower than in previous years, which has helped keep iron ore prices supported despite a weaker global economic outlook.
Gold also contributed to the overall increase in the index. In October, gold prices were buoyed by a rise in investor demand for safe-haven assets amid volatile global markets and uncertainty surrounding central bank policies. With inflation concerns still lingering and bond yields fluctuating, gold maintained its appeal, offering support to Australia’s mining sector.
Rural Commodities Face Headwinds
While non-rural commodities showed signs of strength, the rural commodities sub-index declined, reflecting ongoing difficulties in agricultural exports. Weather disruptions, particularly in eastern Australia, have impacted crop yields, while global competition and changing trade dynamics have limited price gains for key rural products.
Commodities such as wheat, wool, and sugar have seen mixed performances, with some prices softening due to abundant global supply. Dairy and meat exports have remained relatively steady, but not enough to lift the overall rural index. This contrast highlights the growing divergence within Australia’s commodity landscape—where minerals and metals thrive, but agriculture remains under pressure.
Energy Prices Weigh on the Annual Trend
Despite monthly improvements, the energy segment continues to drag down the broader index. The RBA report noted that prices for thermal coal, coking coal, and liquefied natural gas (LNG) declined, offsetting gains elsewhere.
Thermal coal prices, which surged in the post-pandemic years due to energy shortages, have since normalized as supply chains stabilized and renewable energy adoption accelerated. Similarly, coking coal, used in steelmaking, has seen price corrections amid fluctuating global demand.
LNG prices have also eased, mainly due to weaker consumption in Europe and Asia as countries diversify their energy mix. With renewable energy projects expanding and winter demand projections lower than expected, LNG exports have become less profitable compared to previous years.
This sustained weakness in the energy category has been one of the main reasons why Australia’s commodity index remains below its 2024 levels. The decline not only impacts overall export earnings but also influences government revenues and corporate investment within the resource sector.
Implications for the Australian Economy
The October 2025 report carries important implications for Australia’s broader economy. Commodities make up more than 70% of Australia’s total exports, meaning fluctuations in prices directly affect trade balances, fiscal revenues, and even the strength of the Australian dollar (AUD).
The modest recovery seen in October suggests that global demand for Australian goods remains resilient, particularly in the metals segment. However, the yearly contraction of 1.3% serves as a reminder that the economy remains vulnerable to global slowdowns, policy changes in major trading partners, and the broader push toward decarbonization.
The RBA will likely view these numbers cautiously. While improving commodity prices can help strengthen export earnings and support GDP growth, the central bank must also monitor inflationary pressures that can arise from rising input costs. A balanced approach will be crucial as Australia continues to navigate a complex mix of domestic and global economic forces.
Outlook for Coming Months
Looking ahead, analysts expect commodity prices to remain volatile but relatively stable, depending on geopolitical events and global manufacturing trends. The base metals sector is expected to hold steady, supported by ongoing demand for materials used in clean energy technologies, electric vehicles, and infrastructure projects.
However, energy markets may continue to face downward pressure, especially if global oil and gas demand weakens further. The rural sector, meanwhile, could recover gradually if weather conditions improve and global food demand strengthens.
For policymakers and investors alike, the key takeaway from the RBA’s October update is that Australia’s commodity landscape remains divided but adaptable. The nation’s long-term strength in mining and resources continues to serve as a buffer against global headwinds, but diversification and innovation across sectors will be essential to maintain growth in an era of changing global trade dynamics.
In summary, the RBA Index of Commodity Prices for October 2025 paints a picture of cautious optimism. Monthly gains led by metals and minerals show that Australia’s export engine is still strong, yet persistent weakness in energy and rural commodities highlights the challenges ahead. The coming months will test how well Australia can balance its traditional resource strengths with the emerging realities of a rapidly evolving global economy.
