Metal Prices Face Continued Pressure Amid Sluggish Global Industrial Activity

Metal and mineral prices dropped by 7% in the third quarter of 2024 before seeing a slight increase in October. The decline during 2024Q3 was primarily due to indications of slowing industrial activity in major economies, particularly China, coupled with a rise in base metal production earlier in the year. Forecasts suggest that metal and mineral prices will continue to fall in 2025 and 2026, despite a nearly 4% increase in 2024 on a year-over-year basis. Factors that could drive prices higher than anticipated include potential stronger stimulus efforts from China, such as fiscal support, significant supply disruptions, and the introduction of additional trade restrictions. A key risk that could lower prices, however, is weaker-than-expected economic growth in China.

Global manufacturing showed persistent weakness throughout the third quarter of 2024, with manufacturing Purchasing Managers’ Indices (PMIs) globally continuing to decline into contraction territory since July. China’s economic slowdown—the country is the largest consumer of metals—exerted further downward pressure on industrial activity, especially as real estate investment continued to decrease. In late September, there was a brief rise in some metal prices following China’s announcement of stimulus initiatives aimed at boosting growth and stabilizing the property market.

The World Bank’s metals and minerals price index, which rose in 2024, is predicted to decrease by 0.9% in 2025 and by 3% in 2026. The most significant drops are expected for copper, iron ore, and zinc, while prices for aluminum, nickel, and tin are projected to increase. These forecasts are based on expectations of modest global economic growth, including in China, throughout the forecast period. On the production side, an uptick is anticipated for certain metals due to the expansion of mining activities and the gradual recovery of output from major smelters in Europe. In particular, steady growth in iron ore production from Australia and Brazil—leading global producers—along with the addition of new low-cost sources from West Africa set to come online in 2025, is likely to place additional downward pressure on iron ore prices.

More aggressive stimulus measures in China, especially fiscal policies, could drive metal prices higher than current projections, particularly for construction-related metals. However, mining and processing operations could face obstacles such as environmental regulations, labor disputes, shortages of power and water, or adverse weather, all of which could lead to higher prices. Additionally, an increase in trade restrictions, including new export bans, could limit metal production and trade volumes, thereby tightening supply and pushing prices above forecasted levels. On the other hand, a major risk to the current forecast is the possibility of slower-than-expected economic growth in key economies, particularly China, which could exert further downward pressure on metal prices.

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