In 2024, non-ferrous metals diverged in performance both domestically and globally. Copper, aluminum, as well as lead and zinc saw sharp rallies at one point, boosted by mine-side supply contractions. Nickel, however, experienced a brief spike before lingering at low levels amid high inventories and a supply glut. For 2025, we expect the non-ferrous metals supply-demand dynamic to shift from “supply contraction, weak demand” to “supply recovery, demand pickup,” with prices likely exhibiting a downside-protected, upward-biased pattern. While overseas demand may weaken due to Trump’s tariff hikes and an economic slowdown in the U.S. and Europe, Chinese demand is expected to rebound as the private sector completes balance sheet repair.

As China accounts for roughly half of global non-ferrous metals demand, the supply-demand impetus from demand recovery will be particularly strong. Moreover, supply recovery is fraught with uncertainties—declining ore grades, political instability in producing countries, environmental regulations, and insufficient exploration capital expenditure will all constrain mine output growth. Additionally, most non-ferrous metals are held at low inventory levels, making large-scale inventory builds unlikely amid a consumption recovery.

Limited Macroeconomic Headwinds for Non-Ferrous Metals

Monetary Policy

Global monetary policy is set to remain accommodative in 2025. Since December 2024, markets have been pricing in reflation driven by the Trump administration’s policies on tariffs and immigration. Expectations of a slower pace of Federal Reserve rate cuts have strengthened U.S. interest rates and the dollar, exerting some downward pressure on non-ferrous metals.

However, we believe the Trump administration’s policies will not necessarily fuel further inflation. Thus, the Fed is likely to maintain an accommodative monetary stance. China’s monetary policy has shifted to moderate easing—marking the first such dovish signal from the Political Bureau of the Central Committee since 2010.

Fiscal Policy

China will step up fiscal stimulus in 2025, which typically drives demand expansion. For instance, following the 2020 pandemic, the U.S. combined monetary easing with fiscal expansion via household subsidies, stimulating private consumption. At the National Financial Work Conference on December 23–24, 2024, authorities pledged to implement a more proactive fiscal policy in 2025—stepped-up, forceful, and delivered as a coordinated “policy package.”中华人民共和国国家发展和改革委员会

Trump’s Tariff Policy

U.S. tariff hikes on China could temporarily impact exports of mechanical and electrical goods, footwear and apparel, furniture, lighting, toys, and metal products. Mechanical and electrical goods such as home appliances and automobiles are key consumers of non-ferrous metals. Yet China’s export markets have diversified in recent years, with the U.S. share declining steadily. The impact on external demand for non-ferrous metals is therefore expected to be milder than in 2018–2019.

Supply: Modest Recovery with Significant Uncertainties

In 2024, non-ferrous metals supply was broadly constrained, led by tight mine supply that rippled through to smelting. Copper, lead, and zinc treatment charges (TC/RC) fell continuously, slashing smelter profits and even causing losses. Tight bauxite supply drove alumina prices sharply higher, which fed through to primary aluminum. According to listed company earnings, overseas sample copper mines posted output growth of just ~2.3% YoY (≈300,000 tonnes) in the first three quarters of 2024—far short of the 1 million-tonne increase projected early last year. With copper concentrate TCs/RCs depressed, smelters relied on scrap copper and anode copper to maintain operations. Once Q3’s cold material inventories were exhausted, domestic copper smelters began cutting output month-on-month.

Aluminum saw cost pass-through from bauxite supply issues: Australian bauxite output cuts and Guinea export disruptions lifted bauxite and alumina prices sharply. By end-2024, Guinea bauxite stood at $105/t CIF—up 50% from the start of the year. While Guinea bauxite imports normalized in Q4, domestic bauxite output resumed only slowly.

Lead and zinc mine supply also contracted: overseas mines announced cuts totaling ~450,000 tonnes in 2024. Consequently, lead/zinc concentrate TCs/RCs fell steadily. Imported zinc concentrate TC dropped $120/dmt from early 2024 to -$40/dmt in December—negative treatment charges are historically rare.

Looking ahead to 2025, copper, bauxite, and lead/zinc mines are expected to see modest recovery growth, but with high uncertainty. International institutions forecast ~600,000 tonnes of incremental copper mine supply overseas in 2025, though political instability in producer nations, falling ore grades, and labor strikes could derail this. For bauxite, overseas output is rising but domestic growth is limited, leaving a potential 6-million-tonne deficit to fill in 2025. For zinc mines, profit recovery in 2024 has raised expectations of marginal global output gains—some project ~500,000 tonnes of new supply—but actual additions may fall short amid still-weak average capital returns.

Demand: Domestic and External Recovery

In 2024, most non-ferrous metals saw soft domestic but resilient external demand. Domestic manufacturing remained subdued amid a deep property downturn, yet strong exports—especially of automobiles and home appliances—offset weak domestic consumption.

In 2025, domestic non-ferrous metals demand from manufacturing and real estate is likely to recover. Fiscal stimulus will play a key role: a higher deficit ratio, expanded special bond quotas and usage, local government debt restructuring, and increased subsidies for equipment upgrades and consumer goods replacement (the “Two New” policies)中国政府网. Meanwhile, the property market is expected to stabilize gradually, supported by government stockpiling and lower existing mortgage rates. That said, a potential slowdown in demand from oversupplied solar PV capacity warrants monitoring.

With China accounting for half of global non-ferrous consumption, its demand recovery will largely offset weakness or declines overseas. Overall, we expect a notable acceleration in global non-ferrous metals demand in 2025 versus 2024.

Conclusion

In 2025, expectations of U.S. reflation amid an overseas slowdown are unlikely to be disproven. A strong dollar will not persist, and Fed policy will stay accommodative. Coupled with China’s fiscal push and export diversification blunting tariff impacts, both investment and consumption demand for non-ferrous metals will rebound. On the supply side, recovery growth remains highly uncertain, and low inventories will underpin a downside-protected, upward-biased price outlook.

For businesses, long hedges are warranted to mitigate rising procurement cost risks. Investors may seek opportunities from price gains. For overseas investors, COMEX aluminum and copper futures (CME Group) can be used to hedge. Domestic investors may consider SHFE copper and aluminum futures or options to protect against upside price risks.

Source: Compiled from public data