Bank of America predicts volatile metals market for 2025; aluminium and copper prices set to decline

In a recent forecast by Bank of America, analysts have projected a turbulent year ahead for the metals and minerals market in 2025. Bank of America is the second-largest banking institution in the United States and the second-largest bank in the world by market capitalisation, both after JPMorgan Chase.

According to a Reuters report, the volatility will be driven by shifting trade policies, supply constraints, and fluctuating global demand, creating an unpredictable landscape for investors and industries.

Aluminium and copper, two critical industrial metals, are expected to face notable price declines. Aluminium prices are forecasted to drop by 6 per cent, averaging $2,813 per tonne, while copper is predicted to see a steeper decline of 12 per cent, with prices averaging $9,438 per tonne.

The anticipated price fluctuations reflect broader economic concerns, including geopolitical tensions and supply chain disruptions. This outlook signals potential challenges for sectors heavily reliant on these metals, such as automotive, construction, and electronics.

As industries brace for these shifts, stakeholders will closely monitor market dynamics and policy developments that could either exacerbate or mitigate the forecasted volatility.

The bank has warned that a potential trade war between the U.S. and China could intensify market volatility next year. However, the ongoing transition to cleaner energy sources may provide some support to the metals sector.

U.S. President-elect Donald Trump has proposed a steep 60 per cent tariff on all Chinese imports, heightening concerns over bilateral trade tensions. Given that China is both a leading consumer and one of the largest producers of copper, such measures could have significant repercussions on the metals market.

Since Trump's election victory, base metals have faced mounting pressure due to fears of a trade conflict and a subdued demand outlook in China. Additionally, China's sluggish economic growth throughout the year has further weighed on the sector, amplifying concerns over future demand.

During a recent interview with Uday Patel, Senior Research Manager, Metals and Mining - Aluminium at Wood Mackenzie, AL Circle asked, "In light of Donald Trump's return to the U.S. Presidency, what are your insights on the potential impacts and challenges that the European aluminium industry, as well as the global aluminium market, may encounter?"

Uday Patel stated, "Based on campaign promises, the second term for President-elect Trump promises to be as disruptive as the first. Under the Trump administration, the relationship with Europe will be transactional. This means a mix of geopolitics mixed with economic policies. Trump will push European governments to increase their contribution to NATO and increase their defence budgets. He also expects Europe to adopt the same stance as the US on China. In return, he may go easy on tariffs on European imports. The only thing that is certain is that the impact of the new administration will be disruptive for both aluminium prices and premiums as well as global flows of aluminium trade."

For a comprehensive understanding of Uday Patel's insights on various aspects of geopolitical dynamics and their impact on the European aluminium market, please refer to the full interview here.

Image credit: HR Grapevine