Mixed Outlook for Non-Ferrous Metals as Trade Conflicts Loom in 2025
The non-ferrous metals market in 2024 experienced mixed trends, largely influenced by supply conditions and shifting global demand dynamics. Refined copper prices surged by 7%, driven by shortages and increased demand from sectors such as artificial intelligence (AI) and data centers. Aluminum prices also climbed, supported by favorable upstream sectors, despite supply exceeding demand. Zinc entered a bullish phase due to fears of production cuts, while tin saw a tightening supply driven by a reduction in tin ore production.
Conversely, nickel prices faced downward pressure as increased supply from Indonesia coincided with weakening demand for stainless steel and automotive stainless sheet products. Lead prices also edged lower, affected by limited demand for battery replacements. Samsung Futures analyst Ok Ji-hoi, speaking at a recent non-ferrous metal futures seminar, noted that the domestic non-ferrous market faces a challenging year ahead as risks surrounding the trade conflict between the United States and China resurface, particularly with the upcoming Trump administration.
Analyst Ok emphasized that uncertainties are likely to persist until at least the third quarter of 2025, with potential easing beginning in September. President-elect Donald Trump has pledged to impose tariffs on imports, with a review process within 100 days of taking office next January. This may place additional pressure on the Chinese economy, which remains heavily reliant on exports, and could lead to a devaluation of the Chinese currency. In a worst-case scenario, a slowdown in the Chinese economy could impact global non-ferrous metal consumption, given that China is the world's largest consumer in this sector.
Additionally, Ok highlighted the possibility of a stronger U.S. dollar next year, as the Trump administration may expedite the imposition of high tariffs on imports from China and other countries. These developments are expected to impact the non-ferrous metals market significantly.
In the case of refined copper, however, demand is anticipated to improve, as copper remains integral to upstream technology vital for future energy transition projects. Ok projected that energy transition initiatives could account for 20% of total copper consumption by 2040, while AI-based data centers are expected to drive copper demand sixfold by 2050, given their substantial energy consumption requirements. If this energy usage relies on renewable sources, additional copper will be required.
Aluminum production in China is expected to be limited next year to align with a supply cap of 45 million tons, while Indonesia's nickel production remains controlled by the government to balance supply and demand. However, oversupply concerns persist, which may pull down nickel prices further as demand weakens in sectors like stainless steel and electric vehicles.
For lead, prices may be influenced by policy changes in China related to scrap supply, as lead scrap prices peaked at a record high this year. Meanwhile, tin is expected to see a return to steadier supply, following an 88% month-on-month increase in Indonesian tin exports in August. Despite this increase, inventories are rapidly depleting as the semiconductor sector accelerates its recovery, although prices are expected to remain lower for the near future.
