In the early hours of local time on January 3, multiple areas in Caracas, the capital of Venezuela, were bombarded by U.S. forces for about an hour. The specific targets included military airports, the Ministry of National Defense, and ports. During this period, U.S. Delta Force captured Venezuelan President Nicolás Maduro and his wife and took them to the United States. The latest news is that on January 5, the UN Security Council held an emergency meeting on the situation in Venezuela at the UN Headquarters in New York. At the meeting, many countries expressed solidarity with Venezuela, and representatives from China, Russia and other countries strongly condemned the U.S. military operation against Venezuela.

Geopolitical Risk Transmission Mechanism

Distribution and Export Dependence of Venezuela's Metal Resources

Venezuela's metal resources show a highly concentrated distribution pattern. For example, the Orinoco Iron Belt accounts for 92% of Venezuela's total iron ore reserves, with proven reserves reaching 21 billion tons and an average grade of 45% to 65%, making it one of the world's largest undeveloped iron ore regions (In 2024, India acquired Venezuela's largest Orinoco iron ore mine and formulated a new export plan). Gold resources in the Amazon River basin are concentrated in Bolívar State, contributing 60% to 70% of Venezuela's gold output (Venezuela's gold resource potential is estimated to be around 3,500 tons, and its gold production in 2024 was 31 tons). However, the mining depth generally exceeds 300 meters, and the mining cost is 23% higher than the global average. Oil resources are concentrated in the Maracaibo Lake Basin, with proven reserves of 300 billion barrels, but heavy oil accounts for 85%, making refining significantly more difficult than light crude oil. Venezuela's copper reserves rank among the top ten in the world, accounting for approximately 5% to 8%.

In terms of the proportion of exports, Venezuela's metal exports constitute the core source of the country's foreign exchange. In 2023, the export value of Venezuela's metal products reached 18.7 billion US dollars, accounting for 68% of the country's total export volume. Among them, oil exports accounted for 62%, iron ore for 18%, and gold for 12%. In terms of the distribution of export destinations, iron ore exported to China accounted for 74% of Venezuela's iron ore exports; oil exported to the United States accounted for 58% of its oil exports; and gold exported to Turkey accounted for 41% of its gold exports. In 2023, Venezuela's metal export revenue fell by 14% year-on-year, mainly affected by a 12% drop in international oil prices and a 9% decrease in iron ore export volume.

Historically, the blocking effect of the escalation of U.S. sanctions on the supply chain

From a timeline perspective, in recent years, the continuous escalation of U.S. sanctions against Venezuela has had a substantial impact on the global metal supply chain, creating structural gaps in the supply and demand balance of some metals worldwide. In the third quarter of 2023, the U.S. Department of the Treasury expanded the scope of sanctions targeting Venezuela's metal industry to include key varieties such as nickel, aluminum, and palladium, directly leading to a 42% year-on-year decline in the country's metal exports. Among them, nickel exports plummeted from 32,000 tons in 2022 to 18,000 tons in 2023, a drop of 43.8%, while aluminum exports fell by 39.2% over the same period to 124,000 tons. The intensity of such sanctions is not only reflected in trade restrictions but also transmitted through the financial system: the United States has frozen the assets of Venezuela's state-owned oil company (PDVSA) in the U.S., including the $570 million metal trade letters of credit it holds, forcing the country's metal transactions to shift to a non-U.S. dollar settlement system. In addition, the supply chain disruptions at that time were also reflected in the surge in transportation costs - the sea freight for metals from Venezuela to China soared from $35 per ton in 2022 to $82 per ton in 2023, an increase of 134%, mainly due to the rise in insurance costs and route detours caused by U.S. sanctions.

The Impact Path of Regional Conflicts on Logistics Channels

The current geopolitical event in Venezuela may have a multi-dimensional transmission impact on the metal market, with its core mechanism lying in the impact of regional conflicts on logistics channels. Looking at the fluctuation trend of international oil prices, at the opening on January 5, 2026, the price of WTI crude oil quickly rose from $56.9 per barrel to $57.73 per barrel, and the price of Brent crude oil also rose from around $60.45 per barrel to $61.24 per barrel. Although both subsequently fell back, it still reflects the substantial disturbance of geopolitical risks to the energy supply chain. This kind of disturbance will also be directly transmitted to the transportation costs of metal products in the future, especially putting price pressure on industrial metals such as copper and nickel that rely on maritime transportation.

The specific manifestations of logistics channel blockages can be viewed from three levels: first, at the infrastructure level, regional conflicts have caused damage to land transportation systems such as highways and railways, which will directly affect the land transportation efficiency of mineral resources for Chinese-funded enterprises in the region; second, at the maritime transportation level, the operational stability of Venezuela's main port, Puerto Cabello, has declined, restricting the export of 600,000 tons of copper products per year by a Chinese copper enterprise; third, at the security cost level, the increase in transportation insurance premiums has led to an increase in the FOB cost of 353,600 tons of copper products of a Chinese copper enterprise by $10 - $20 per ton. Data shows that after the incident, LME resumed trading on January 5th. On that day, the price of London copper rose by 5.02%, and nickel rose by 3.16%, significantly higher than the levels of aluminum (2.28%) and zinc (2.59%), which confirms the differentiated impact of logistics risks on different metal categories. This linkage mechanism indicates that the risk aversion demand triggered by logistics blockages is also reshaping the value distribution pattern of the metal market. The differentiation between these varieties is essentially a differential pricing based on expectations of the duration of logistics risks.

Analysis of Supply and Demand for Key Metal Varieties

　　Risks of Bauxite and Alumina Supply Disruptions

According to the "Guidelines for Foreign Investment and Cooperation in Countries (Regions) - Venezuela (2021 Edition)" issued by China's Ministry of Commerce, the total bauxite resources in Venezuela amount to 3.48 billion tons, of which the proven reserves are 1.33 billion tons, ranking third in the world, with 90% concentrated in Bolívar State. However, in sharp contrast to Venezuela's huge resource potential is its extremely low capacity utilization rate, long-stagnant output, which is restricted by multiple factors.

In 2014, the international oil price plummeted, severely impacting Venezuela, which relies on oil as its economic pillar. The collapse of Venezuela's domestic economic pillar left the government unable to provide the necessary industry subsidies and incentive policies for the bauxite industry, as well as funds for port maintenance and power supply. As a result, bauxite production began to drop sharply.

In 2016, hyperinflation began in Venezuela, leading to a surge in corporate operating costs. Even Venezuelan state-owned enterprises such as CVG were unable to maintain basic maintenance funds.

In 2019, the United States imposed severe sanctions on Venezuela, leading to the complete withdrawal of foreign companies such as BHP Billiton, and even making it difficult for Venezuelan state-owned enterprises to survive. CVG-Bauxilum, an integrated bauxite-alumina enterprise under CVG, was included in the SDN list, with its overseas accounts frozen and unable to conduct international settlements, forcing the export revenue of bauxite to zero. Under huge policy and financial risks, Venezuelan private capital was even more reluctant to enter, resulting in no new output or investment in the aluminum industry for a long time.

After experiencing the above series of changes, Venezuela's aluminum industry has shrunk severely. The CVG electrolytic aluminum plant was shut down in 2019, leaving only the Venalum aluminum plant in Venezuela with an annual output of less than 100,000 tons. The output of bauxite is only sufficient for the use of alumina plants under Venezuela's CVG, with no new production capacity and almost no export trade. These systemic problems cannot be improved in the short term.

Therefore, at present, Venezuelan bauxite has almost no impact on the global supply and demand pattern. China attempted to import 27,200 tons of Venezuelan bauxite in 2017, but there have been no import records since then. As a result, the product resources in Venezuela's aluminum industry chain have not been effectively converted into market supply.

Changes in the supply and demand patterns of major commodities such as copper and nickel

Venezuela's copper production has not been clearly announced, and this variable is unlikely to cause significant disturbances to the market in the short term. However, if the geopolitical situation in Venezuela spreads to other Latin American regions, copper mine output may be disrupted, exacerbating the shortage of raw materials.

Venezuela, as a major global supplier of nickel ore, its political turmoil has led to a halt in exports, which is reshaping the global nickel market pattern. The country is endowed with superior nickel ore resources, mainly distributed in Bolívar State, where the ore grade is generally higher than 1.5%, significantly exceeding the global average of 1.2%. Looking at the actual local nickel ore supply and output in recent years, Venezuela's nickel ore output is basically zero. It will be difficult to have a substantial impact on the Latin American region in the later period, but it still remains a trigger for capital inflow in terms of market sentiment.

The strengthening of the safe-haven properties of gold and silver

The escalation of this conflict has significantly strengthened the safe-haven properties of gold and silver. Despite the decline in the prices of gold and silver due to margin adjustments before New Year's Day, there was a rapid rebound after New Year's Day. Geopolitical risks have intensified the shift of global capital to the precious metals market for safe haven. Looking at the price performance in December 2025 alone, the price of gold rose by more than 70% that month, and the price of silver surged by nearly 150%, hitting a historical peak. This phenomenon is highly consistent with historical patterns: from 1975 to 1980, the price of silver rose by more than 800%, while the price of gold increased by only 300%; from 2000 to 2011, the price of silver rose by 700%, and the price of gold went up by 500%. Currently, the inversion of U.S. Treasury yields caused by the conflict and the continued expectation of interest rate cuts by the Federal Reserve have further weakened the credit of the U.S. dollar, prompting central banks to increase their gold holdings.

The World Gold Council predicts that in 2026, gold will enter a "dynamic balance" phase. Although it will not experience a one-sided surge like in 2025, it is still expected to maintain an upward trend supported by various factors.

Silver is driven by both its financial attributes and industrial demand. Although precious metals as a whole benefit from risk-averse sentiment, the volatility of silver is significantly higher than that of gold. On December 29, 2025, due to the exchange's increase in margin requirements, the price of silver plummeted by 9% in a single day, which also led to a 4% drop in the price of gold. In terms of demand, the photovoltaic industry has become the biggest driver. In 2025, the global photovoltaic installed capacity increased by 16% to 30% year-on-year, and high-efficiency technology routes increased silver consumption per GW by 20% to 30%. The amount of silver used per new energy vehicle is 1.7 to 3.3 times that of traditional vehicles, and the silver consumption per cabinet of AI computing power servers reaches 1.2kg, which together promote the growth of industrial silver demand.

Assessment of Supply Chain Vulnerability of Platinum Group Metals (Platinum, Palladium)

The supply chain of platinum group metals (platinum, palladium) is highly concentrated. South Africa and Russia together account for more than 80% of global platinum production, while palladium supply is more dependent on Russia, which accounts for 45% of the global supply. In 2026, the supply chain vulnerability index shows that the Herfindahl-Hirschman Index (HHI) for platinum reaches 5230, and for palladium it is 3137, both far exceeding the warning threshold of 2500, indicating an extremely high risk of supply monopoly. The risks of platinum mines in South Africa are mainly limited by local power shortages, labor disputes and aging equipment; the risks of Russian palladium mines lie in the risk of export controls faced due to geopolitical conflicts. Major consumer regions such as the European Union and China have significant differences in external dependence.

If the United States escalates sanctions against Venezuela, it will impact the platinum group metals supply chain through three paths: first, the risk of trade disruption. Although Venezuela is not a major producer, its gold exports account for 2% of the global total. If the U.S. expands the scope of sanctions to include platinum group metals, it will exacerbate market panic. Second, a surge in transportation costs. Latin American routes account for 12% of global metal transportation volume, and the shipping insurance premium rate has risen by 30% due to the conflict, directly pushing up the logistics costs of platinum group metals. Third, the alternative supply gap. South Africa's platinum mine output has dropped by 15% due to the power crisis, and Russia's palladium exports have decreased by 20% under sanctions. This conflict will force enterprises to turn to more costly recycling channels, but platinum recycling volume in 2025 will only account for 12% of total supply, making it difficult to fill the gap in the short term.

Amplification Mechanism of Speculative Behavior in the Futures Market

In the fluctuations of the metal futures market triggered by geopolitical events, speculative activities will amplify the price volatility effect through emotional transmission and capital flows. During the Russia-Ukraine conflict in 2022, the price of LME nickel rose by more than 20% in a single day, and the price of aluminum increased by 12% due to the energy crisis in Europe, highlighting the amplifying effect of speculative capital on short-term supply and demand imbalances. From a broad classification perspective, the core driving factors of speculative behavior include: investors' panic expectations of supply disruptions, the rapid inflow and outflow of leveraged funds, and instantaneous changes in market liquidity. For example, in 2022, the volatility of LME copper prices rose from 15% to 28%, mainly because Russia, as the world's third-largest copper producer, the Russia-Ukraine conflict triggered short covering and long squeezing. The proportion of speculative positions increased by 37% in the first week of the conflict, exacerbating the deviation of prices from fundamentals. In 2021, the Australian bushfires led to expectations of tight bauxite supply, and the LME aluminum price rose by 19% in July 2021; during the same period, the net inflow of speculative funds into aluminum futures contracts reached 4.2 billion US dollars, accounting for 18% of the monthly trading volume. In the nickel futures short squeeze incident, some institutions used over-the-counter options combined with leverage to expand their position risk exposure to more than 5 times the actual margin, leading to the LME suspending trading and revising its rules.

Looking at the current changes in overseas industrial product positions, the highest holdings are still in gold, copper, and aluminum, and the leverage effect of funds will be further amplified in price fluctuations.

Regional market differentiation trend

Reconstruction of the Metal Trade Pattern in Latin America

This incident has not yet had a substantial impact on metals such as copper, nickel, and aluminum. However, judging from the inflow of market funds, the market is more inclined to believe that Venezuela's corresponding metal reserves will affect the global supply in the future. In addition, it should be noted that in recent years, due to the obstruction of US dollar payment channels, Venezuela's trade settlement system has forced enterprises to switch to RMB settlement. For example, in the first half of 2025, 85% of Venezuela's exported crude oil was exported to China, and these transactions mostly used RMB for settlement. With the escalation of this incident, the trade network in Latin America is also being forced to restructure, and China may become its core alternative partner. In the future, in addition to crude oil, more resources such as non-ferrous metals and precious metals will seek deeper integration and protection, which will change the existing trade flow and pattern.

Asian buyers may turn to Africa or Oceania

Demand for metals in Asian markets (including emerging countries) continues to grow, but this incident has heightened uncertainty regarding the supply in the metal market. Currently, Asian buyers are adopting a cautious attitude towards metal supplies from Venezuela, primarily due to concerns about logistics disruptions caused by political risks in South America. For instance, silver exports from Peru and Mexico have been restricted due to similar incidents, directly affecting global inventory levels. China has tightened its silver export policies; in 2026, only 44 enterprises have obtained export qualifications, and the annual export volume is expected to drop sharply by 5,000 tons. All these factors have led Asian buyers to accelerate their search for alternative sources of resources such as metals and non-metals. In terms of resource distribution in the Asian region, the potential increase in resources in the Middle East and Russia is extremely limited, and transportation costs are relatively high. Therefore, this trend has driven Asian enterprises to turn their attention to Africa and Oceania.

Africa and Oceania have become priority choices for Asian buyers due to their stable supply capacity. Benefiting from its rich mineral resources, Africa has become a major source of resource imports for Asia, such as copper from the Democratic Republic of the Congo and gold from South Africa. Oceania has relatively stable politics and potential for growth. In addition to the advantages of sufficient resource reserves and low political risks, controllable costs are also obvious advantages of the two regions. Although the transportation costs in these two regions are relatively high, in the long run, the risk of resource nationalization is lower than that in Latin America.

In terms of feasibility, it is somewhat feasible for Asian buyers to shift their procurement to Africa and Oceania, but they still need to cope with multiple challenges. First, logistics bottlenecks: in terms of trade logistics costs, transportation costs in Africa have increased by 40% to 45%, and in Oceania by 35% to 40%, which may weaken price competitiveness. Second, trade barriers. Some African countries have insufficient infrastructure and low customs clearance efficiency, which may prolong the delivery cycle. Third, geopolitical fluctuations. Resources in Oceania are concentrated in a few enterprises, leading to concentrated bargaining power. Although Africa has low risks, local conflicts may affect production capacity. Fourth, market adaptation. Asian enterprises need to rebuild their supply chains, during which they may face a capacity gap.

Evaluation of Europe's Inventory Buffering Capacity

European metal inventories play an important role in stabilizing market supply, regulating market demand, and have an impact on metal market prices. When global supply chains are disrupted, European inventories can fill the gap. For example, during the Red Sea crisis in 2023, 300,000 tons of European aluminum inventories were released, mitigating the impact of supply disruptions in the Middle East.

Currently, metal inventories in Europe are relatively sufficient, but they may change in the later period due to fluctuations in the global metal market. At present, the scale of European metal inventories is relatively stable, mainly benefiting from the gradual recovery of the supply chain over the past year. Such regional differences lead to an imbalance in buffering capacity. Core countries can cope with short-term demand fluctuations, while marginal areas are vulnerable to shocks.

Of course, although European metal inventories have a certain buffering capacity, their effectiveness may be limited under the situation of increasing geopolitical risks. In particular, the rising uncertainty in global oil supply caused by the turbulent situation in Venezuela will also indirectly push up metal smelting costs and weaken the role of inventories in regulating prices.

Enterprise Emergency Strategies

Setting of Safety Threshold for Raw Material Inventory

The safety threshold for raw material inventory is a dynamic inventory baseline set by enterprises based on production needs and market fluctuations, which is used to balance supply stability and capital occupation costs. This threshold needs to comprehensively assess factors such as production scale, raw material supply risks, logistics cycles, and price fluctuations, and realize dynamic adjustments through real-time data monitoring. Taking China's non-ferrous metal industry as an example, in 2025, the cumulative year-on-year growth rate of industrial added value basically fluctuated in the range of 7.1% to 7.8%, indicating that the industry's capacity expansion has a rigid demand for raw materials. It is recommended that enterprises can set differentiated thresholds accordingly.

In terms of the production demand benchmark, taking the industrial added value data of Shanxi Province as a reference, from 2020 to 2024, the industrial added value of the province increased from 645.88 billion yuan to 988.704 billion yuan, with an average annual compound growth rate of 11.2%, which confirms that the regional production intensity directly affects the rate of raw material consumption. Enterprises need to link the threshold with their own production capacity. For example, an enterprise with an average monthly output of 1,000 tons needs to reserve raw materials for at least 15 days to cope with sudden demand.

In terms of balancing cost and efficiency, for raw materials where transportation costs account for more than 15% (such as electrolytic copper), the threshold period is recommended to be shortened to 7-10 days; while for stable products with a price volatility rate lower than 5% (such as aluminum ingots), it can be relaxed to 15-20 days.

In terms of data-driven calibration, based on the year-on-year growth rate of industrial added value above the designated size, when the growth rate of the non-ferrous metal smelting industry remains high for several consecutive months, it is recommended to increase the threshold by 5%; conversely, if the industry growth rate falls below 5% (for example, it was only 0.9% in November 2025), the threshold should be reduced by 3% to 5%.

In terms of incident response rules, during periods of geopolitical conflicts or natural disasters, when the demand for safe-haven assets such as gold surges, it is recommended that the threshold for relevant raw materials be immediately increased by 30% to 50%.

Application of Force Majeure Clauses in Long-Term Agreements

In this geopolitical crisis, metal enterprises should strictly abide by the force majeure clauses in long-term agreements to avoid risks. The core content of the clauses includes three parts: first, the criteria for determining events, which clearly include political unrest, government actions, etc. in the scope of force majeure; second, the notification procedure, which requires the affected party to give written notice to the other party within 48 hours after the occurrence of the event; third, the scope of exemption, covering the delayed performance of the contract or partial exemption from liability. For example, a copper mine enterprise was delayed in delivery due to the port blockade in Venezuela, and successfully avoided liquidated damages after invoking the clause.

The application of the clause must meet three conditions: the event must conform to the type of force majeure defined in the contract, such as the current political crisis in Venezuela; the enterprise must prove that there is a direct causal relationship between the event and the performance obstacle, for example, transportation disruption caused by government control; finally, the enterprise must fulfill the obligation of timely notification and provide official certification documents.

Proper application of the clauses can achieve three effects: first, exemption from liability for breach of contract. For example, an aluminum company delayed delivery due to a crisis and avoided paying a penalty of 15% of the contract amount after invoking the clauses; second, securing a grace period for performance, which can usually be extended by 30 to 90 days; third, reducing legal risks and avoiding arbitration disputes. Enterprises should note that the clauses do not apply to commercial risks such as market fluctuations, and contract templates need to be updated regularly to cover new types of geopolitical risks.

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