Monetary tightening likely to keep industrial metal prices on leash
Ferrous and non-ferrous metals have come under pressure on fears of a hawkish stance from US Fed
Industrial metals, both ferrous and non-ferrous, have experienced a decline in recent weeks due to concerns about the United States Federal Reserve adopting a more aggressive stance. Analysts predict that further monetary tightening will act as a significant downside risk for these metals throughout the remainder of the year. While supply and demand fundamentals continue to influence the relative performance of individual metals, some are proving more resilient than others amidst growing macroeconomic headwinds.
Research agency BMI expects global inflation to persist in 2026 due to the West Asian conflict, which is elevating energy and transport costs. However, inflation is expected to ease below 4% from 2027. Key metals like copper, steel, and aluminum remain highly sensitive to geopolitical activity, manufacturing demand, and policy-driven shifts.
With the West Asia conflict likely to continue into 2027, inflationary pressures are expected to stay elevated for a more extended period, potentially leading to a higher-for-longer interest rate environment. This situation may put downward pressure on industrial metals demand expectations and limit upside across the industry. Factors such as the US-Iran conflict, the Russia-Ukraine conflict, and the potential tug of war between the US and China will impact copper prices, while the Hormuz Strait will determine aluminum and steel prices.
However, some metals, such as tin, have been notable performers, rising 33.5% year-to-date to $54,125/tonne, due to strong long-term structural demand driven by AI investment and the energy transition.
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