Copper, aluminium and the rest: why invest in metals. China and tariffs uncertain
Energy transition momentum slows, but insufficient supply supports prices. Trump's tariffs and Chinese growth critical factors
3' min read
3' min read
The causes change, but the effect is the same: copper, aluminium, zinc and - to a lesser extent - lead, still have growth potential, despite the fact that these metals have already risen quite a lot in recent years.
At the beginning of 2024, in fact, the strong push came from the expectations of utilisation for the energy transition. Now, however, the reasons for the rises lie more in the scarcity of supply in relation to demand. It is not so much the green wave that is supporting prices, also because it is shrinking, but the imbalance in the commodity market.
Refiners under pressure
.'Copper, for example,' says Michael Palatiello, managing director of Wings Parners, 'has settled at $9,000 after peaking at $10,000 in the spring and also in early October, but we think it can go as high as $10,500 to $11,000 because there is a shortage of raw material. The mines are old and there has been no investment in the industry, with the result that the premiums for refining are very low'.
Premiums are low because the mining activity is obsolete and the plants are heavily exploited; therefore, less useful product is obtained for the same amount of ore extracted and the discount on the price of copper given by the extractor to those who refine it and produce copper cathodes goes down. 'This situation, however,' Palatiello continues, 'is not sustainable; in 2025 many contracts will expire, premiums could fall further, and the weaker refiners will be forced out of the market because they may no longer be able to operate with the lowered margins. Therefore, we foresee a drop in supply and a possible increase in prices'.
Widespread situation
.The pressure on producers is also there for other non-ferrous metals, such as zinc, lead and aluminium. All three, in fact, have attractive price prospects. 'Especially aluminium has strong bullish potential and could reach $3,000 or $3,200 a tonne,' adds Palatiello. The expert points out that alumina, i.e. aluminium oxide, is at an all-time high and the price increase is due to the economic strategy of New Guinea, where most of the bauxite, from which aluminium is extracted, comes from. The African state is blocking exports because it wants to create a domestic industry that also refines the ore, so as to sell finished products and make more profit.
