Metal Trade Show | 2025 Outlook: Non-Ferrous Metals to Experience "Easy Rise, Hard Fall" in Price Trends
In 2024, the performance of non-ferrous metals exhibited a divergence internationally. Copper, aluminium, and lead-zinc saw significant price increases, driven by tightening supply at the mining level. Conversely, nickel, burdened by high inventories and oversupply, briefly surged before settling at lower levels. According to Metal Trade Show, the supply and demand dynamics for non-ferrous metals in 2025 are expected to shift from a phase of “supply contraction, weak demand” to “supply recovery, demand rebound,” with prices anticipated to follow a pattern of “easy rise, hard fall.” While overseas demand may weaken due to tariffs imposed by the Trump administration and economic slowdowns in the US and Europe, domestic demand in China could recover after private sector balance sheets are restored.
Given China’s dominant role in global non-ferrous metal consumption—accounting for nearly half of global demand—any recovery in domestic demand is expected to significantly boost the supply-demand balance. However, the supply-side recovery remains highly uncertain, with challenges such as declining ore grades, political instability in mining countries, environmental concerns, and insufficient exploration capital potentially limiting mining output. Moreover, most non-ferrous metals are currently at low inventory levels, making large-scale stockpiling unlikely even if consumption picks up.
Limited Negative Impact from the Macro Environment
Monetary policy in 2025 is expected to remain broadly accommodative across major economies. Since December 2024, markets have been adjusting to inflationary expectations driven by the new US government’s policies on tariffs, immigration, and other factors. The market anticipates that the Federal Reserve will slow the pace of interest rate cuts, leading to a stronger US dollar, which may exert some downward pressure on non-ferrous metals.
However, we believe that the policies under the new Trump administration will not necessarily result in further inflation, meaning the Federal Reserve is likely to continue with its accommodative monetary policy. In China, the shift toward a more moderate monetary policy marks the first time since 2010 that the central political bureau has explicitly signaled easing.
Regarding fiscal policy, China is set to adopt a more expansionary approach in 2025. Typically, fiscal expansion stimulates demand, as seen in the US after the 2020 pandemic, when both monetary easing and fiscal support stimulated consumption. On December 23-24, 2024, the National Fiscal Work Conference announced that a more proactive fiscal policy would be implemented in 2025, with greater emphasis on policy coordination to boost the economy.
On the tariff front, US tariffs on Chinese goods are expected to have a short-term impact on sectors such as machinery, electronics, textiles, furniture, lighting, toys, and metals. These tariffs affect non-ferrous metals used in industries such as home appliances and automobiles. However, given China’s increasing diversification in machinery and electronics exports and the declining share of exports to the US, the impact on non-ferrous metal exports is expected to be less significant than during the 2018-2019 tariff period.
Supply Recovery with Uncertainty
In 2024, supply of non-ferrous metals contracted across the board, primarily due to tight mining supply, which impacted the smelting sector. This resulted in continued declines in copper and lead-zinc processing fees, leading to a sharp drop in smelting profits and, in some cases, losses. Tight bauxite supply caused alumina prices to surge, which in turn drove up the cost of electrolytic aluminum. According to financial reports from listed companies, copper production in overseas mines grew by around 2.3% year-on-year in the first three quarters of 2024, adding approximately 300,000 tons—far below the initially expected increase of 1 million tons. With processing fees for copper continuing to fall, smelters turned to scrap copper and anode copper to sustain production. By the third quarter, stocks of cold materials were depleted, prompting domestic copper smelters to begin reducing output on a monthly basis.
Aluminum faced cost pressures due to bauxite supply issues, with disruptions in exports from Australia and Guinea driving significant increases in bauxite and alumina prices. By the end of 2024, the CIF price of bauxite from Guinea had risen by 50% from the beginning of the year to $105 per ton. Although imports of bauxite from Guinea returned to normal in the fourth quarter, the recovery of domestic bauxite production has been slow.
Lead-zinc mine supply also contracted, with overseas mines announcing production cuts of about 450,000 tons in 2024. As a result, lead-zinc processing fees continued to fall, with zinc concentrate processing fees dropping to negative $40 per dry ton in December—a rare occurrence in history.
Looking ahead to 2025, copper, bauxite, and lead-zinc mines are expected to see a recovery in output, but significant uncertainties remain. International forecasts predict a 600,000-ton increase in copper mine output in 2025, but political instability in major copper-producing countries, declining ore grades, and potential labor strikes may impact this growth. Bauxite production is expected to rise overseas, but domestic growth remains limited, potentially creating a shortfall of up to 6 million tons. In the zinc sector, the recovery of zinc ore profits in 2024 is expected to drive a modest increase in global zinc mine output, with some forecasts predicting an increase of 500,000 tons. However, actual growth may fall short of expectations due to low capital returns.
Demand Trends: “Rebound in External Demand, Rebound in Domestic Demand”
From a demand perspective, 2024 saw weak domestic demand for most non-ferrous metals, but strong external demand. Domestic manufacturing remained sluggish, and the real estate sector underwent deep adjustments, while exports surged—especially in the automotive and home appliance sectors. This robust external demand helped offset weak domestic consumption.
In 2025, with fiscal policy expansion—including increased fiscal deficits, higher quotas for special bonds, and government support for local governments to reduce debt—demand for non-ferrous metals in China’s manufacturing and real estate sectors is likely to recover. However, attention should be given to potential slowdown in non-ferrous metal demand due to overcapacity in the photovoltaic sector.
As China accounts for half of global non-ferrous metal consumption, the recovery in domestic demand is expected to largely offset slower or declining overseas demand. Therefore, we anticipate that overall non-ferrous metal demand in 2025 will likely accelerate significantly compared to 2024.
In summary, while the expected economic slowdown overseas and inflationary pressures under Trump’s policies may persist, the strong dollar is unlikely to last. The Federal Reserve is expected to continue its accommodative monetary stance. Combined with China’s fiscal stimulus and the diversification of its exports, which weakens the impact of tariff hikes, both investment and consumption demand for non-ferrous metals are likely to recover. On the supply side, while a recovery in output is expected, significant uncertainties remain. Low inventories indicate that non-ferrous metal prices are more likely to rise than fall in 2025.