Global industrial metal markets have entered a phase of turbulence, becoming hostages of debt and equity markets.
Macro‑economic tug‑of‑war and the copper swing
Investors watch company results and US bond yields with dread, as they hit multi‑year highs.
As a result, copper futures on the London Metal Exchange show very sharp swings, after a drop of 1,3% a rebound of 0,5% to the level of 13 477 USD per tonne.
Copper, a barometer of global economic conditions, is stuck in a stalemate between a raw‑material shortage and pressure to raise interest rates.
Charles Cooper of Wood Mackenzie points to a consolidation of red‑metal prices below peaks of 14 500 USD per tonne.
Stiff valuations have triggered a wave of caution among Chinese spot buyers, opening the door to aggressive two‑way volatility.
Speculative capital reacts to a deep divergence between debt markets in the US and China.
Rising inflation in America strengthens the USD and triggers profit taking from long positions.
Meanwhile, record‑low yields on Chinese bonds expose the weakness of local industry and the real‑estate market, which does not generate the physical demand needed for a sustained upward rally.
Chart. Copper spot price
Source: Trading Economics.
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Supply stalemate, disasters, breakdowns and the AI revolution
Despite macroeconomic headwinds, the physical market remains highly sensitive to sudden supply disruptions.
Optimistic copper narrative driven by the energy transition and the construction of AI data‑center infrastructure collides with brutal operational reality.
The return to full capacity at the world’s second‑largest copper mine, Indonesia’s Grasberg, was delayed until 2028 due to a catastrophic mudslide.
The situation worsened with last year’s floods at the Kamoa‑Kakula mine in the Democratic Republic of Congo and a serious accident at Chile’s El Teniente.
Physical copper stocks are now concentrated in US warehouses after a wave of tariff‑free purchases, drastically limiting the commodity’s widespread availability.
Although the vision of massive copper consumption driven by AI expectations sparks the imagination of market players, real consumption in this area has yet to fully reflect in financial results.
In simpler terms, AI is not yet earning itself, or at least not to the extent of breaking even.
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Ormuz Strait crisis, a check‑mate for aluminium, zinc and nickel on the back of the construction sector
The situation is equally dramatic in the aluminium market, where a structurally tight supply collides with anemic end demand in Europe and North America.
The situation is further sharpened by geopolitics. About 9% of global aluminium supply comes from the Persian Gulf, from which most firms are currently unable to export the metal.
All because of the double blockade of the Ormuz Strait. Yet experts see no sufficient demand momentum at the moment that would permanently lift prices toward 4000 USD per tonne.
Nickel, zinc and tin also behave nervously, swinging between gains and losses.
In the case of zinc, risks lean toward demand pressure, as 55% of global consumption of the metal goes to the construction sector.
Although energy markets remain relatively calm amid the escalation of the Middle East conflict, the situation could change at any moment.
Stock market investors must buckle up, as everything points to the commodity carousel just getting underway.
Chart. Aluminium spot price
Source: Trading Economics.
See also: India’s Prime Minister discourages gold buying. A lightning‑fast market reaction
Source: CNBC.
