Bank of America predicts volatile metals and minerals market heading into 2025

Analysts at Bank of America have forecast a volatile metals and minerals market in 2025, according to a Reuters report. 

The volatility in the metals market would be influenced by potential trade policies, supply constraints and demand shifts, the analysts said. 

The bank projected aluminium and copper prices to decline by 6% and 12% respectively next year. 

Prices of aluminium are expected to average $2,813 per ton and those of copper are seen at $9,438 per ton, according to the report. 

At the time of writing, the three-month copper contract on the London Metal Exchange was $9,007.50 per ton, down 0.2%.

The contract for aluminium on the LME was at $2,584 per ton, down 0.5% from the previous close.

Trade dispute with China

The bank said that a possible trade war between the US and China could exacerbate market dynamics next year.

However, shifts to energy transitions may offer some support to these metals. 

US President-elect Donald Trump has threatened to impose a 70% tariff on all Chinese imported goods. 

China is one of the top consumers of metals, and also among the biggest producers of the red-metal. 

Base metals have been under pressure since Trump's presidential win due to the potential trade war and weak demand outlook in China. 

A trade dispute between the two countries could significantly affect demand for metals. 

Moreover, sluggish economic growth in China has also been weighing on the metals market for most of this year. 

Surplus in the iron ore market 

Overcapacity in China’s steel industry and growing exports are expected to push the iron ore market into surplus.

The Bank of America said price stabilisation for the iron ore market may depend on production cuts. 

Steel inventories at major Chinese steel mills rose for a second consecutive week to 15.6 million tons in mid-November, up 13.8% compared to early November, according to data from the China Iron and Steel Association. 

The association also reported that steel production in China increased in November as margins recovered and some of the mills restarted production after cuts in August and September.

Precious metals price forecast

The Bank of America projected that gold prices are expected to average around $2,750 per ounce next year. 

The bank said though prices have come under pressure due to a rising dollar and expectations of elevated interest rates, portfolio diversification and global debt are likely to provide support to the yellow metal. 

At the time of writing, the February gold contract on COMEX was at $2,665.41 per ounce, up 0.7% from the previous close. 

It further said silver prices are expected to rise next year due to an increase in demand for solar panels and electric vehicles. 

However, the bank remained bearish for metals in the platinum group. 

Meanwhile, lithium prices were seen under pressure due to new supply and limited production discipline, the bank said.

However, prices may stabilise post 2025, it said. 

The bank though remained bullish on uranium, as it expects increasing demand from nuclear power plants.