Metals and mining: a year of trading dangerously

Uncertainty surrounding the US administration’s trade tariff policy has paralysed investment and put a chokehold on economic growth around the world. Metals demand has been hit hard, and new metals supply is being stymied.  

In our July edition of Perspectives – Metals and Mining, we review the outlook for near-term commodity-market trends, drawing out common themes, exploring the contrasting fortunes of the commodities we cover and adjusting our forecasts. Fill in the form for a complimentary selection of slides from our report and read on for a brief outline of the bigger picture. 

US tariffs: how to lose friends and alienate investment 

It remains to be seen where US tariffs on imported products from the rest of the world will end up, but the uncertainty surrounding the US administration’s tariff policy is already having a clear and tangible effect on industrial production. 

Wood Mackenzie forecasts net import tariffs on goods into the US to average around 10% of total annual US import values throughout President Donald Trump’s term, up from 2.5% in 2024. It is questionable whether the tariff policy will meet its stated objectives of raising US domestic investment in supply and boosting domestic industrial and manufacturing revenue. 

The US economy is already in reverse, with GDP shrinking 0.1% on the year in Q1. We now forecast 1.5% and 1.6% US GDP growth in 2025 and 2026, respectively. Consumer confidence has collapsed, and inflation expectations remain high. The US dollar is losing its allure. 

Global growth takes a hit 

The dent to confidence in the US is having clear knock-on effects on the global economy. We have cut our forecast for 2025 global GDP growth to 2.4% from 2.8%. Industry will be disproportionately affected: we have shaved 90bp off our global industrial production forecast to 2.2% in 2025 and trimmed our 2026 forecast by 60bp to 2.6%. 

The picture in Asia is mixed. Tariff-induced supply-chain relocation should benefit India, but we have downgraded our Indian GDP forecast by 40bp to 6.4% this year, nonetheless. Taiwan, South Korea, Japan and other Southeast Asian economies are at even more risk from new tariffs. 

The European Union’s fledgling growth is set to stagnate as a result of the tariffs, meanwhile, as industrial production remains flat in 2025 following two years of decline. 

China holds its own 

China followed a good end to 2024 with solid growth in the year to May. Exports were up 6% despite tariffs and industrial production was up 6.3%. This puts China on course for better annual growth in 2025 than in 2024.  

There are concerns for H2 2025, however. Fiscal support for consumer-goods and auto trade-in programmes, which have been driving growth, is likely to shrink in the second half of the year and into 2026. The outlook for real estate remains poor. And year-to-date export growth has been partly due to stockpiling ahead of the US tariffs; May exports to the US down were down 30% on the year, signalling problems ahead as trade barriers increase.  

Our 2025 GDP growth forecast for China is now 4.3%, down 50 bp from our previous estimate. This may be conservative, but we think reaching the country’s 5% target will be a challenge. 

Metals and mining feeling the heat 

Concerns about tariffs and China’s growth prospects have been keeping metals markets subdued. Battery metals have been testing new lows. Plug-in electric vehicle sales growth has been encouraging, but momentum has been lost, particularly outside China. Supply-side responses have had a negligible impact.  

Base metals have fared best. We have seen perverse market outcomes in copper of late, with a mini short-squeeze driving up prices on the London Metal Exchange (LME) in June, while low metal stocks and concentrate shortages are also propping up copper and zinc prices. 

We have reduced our 2025 price forecast across the board on lower industrial production growth rates. Cobalt remains an exception, due to the Democratic Republic of the Congo’s continue export ban. 

The outlook through 2027 

We expect copper, aluminium and zinc to largely hold onto recent gains, despite refined metal deficits turning into surpluses over the period. Stock days of consumption are set to remain below long-term averages, even as supply improves, supporting prices. However, we have scaled back our forecast price highs and now see zinc averaging US$3,000/t in 2026, with a US$3,300/t peak no longer on the cards. Copper will stay below US$10,000/t.  

The outlook for battery raw materials remains similar to our previous outlook. Upside potential is still limited, although spodumene and lithium chemical prices are likely to recover from very low levels. The rare earths outlook is still positive on good magnet demand and persistent government limits on Chinese imports and production. 

Learn more 

For more detail, fill in the form for a complimentary selection of slides from our July ‘Perspectives’ metals and mining report.