Metals & Mining

During 2024, despite the beginning of a long awaited easing of US monetary policy driven by beliefs of inflation tracking toward targeted expectations, the global economic impact of higher rates, a continued sluggish Chinese economy whose various stimulus plans had not generated significantly improved metal demand, and a red-hot US dollar that gained momentum from President-Elect Trump’s election victory in November pressured copper, coking, thermal coal and ferrous metal prices while gold prices continued to achieve record nominal high levels aided by extreme Central Bank gold demand and the prospect of lower interest rates. Entering 2025, investor expectations remain muted as markets grapple with the potential impacts of a less certain Federal Reserve monetary policy as inflation expectations begin to reverse, how the proposed Trump Administration tariff policies may either restrict economic activity or offer inflationary pressures and the uncertain prospects of a recovery in Chinese economic activity as the Chinese government offers fiscal solutions. While we believe global metal demand growth expectations will reset as markets face an uptick in visible inventories, higher funding costs and slower than anticipated global industrial activity, we believe medium and longer-term structural metal supply deficits will support pricing with continued cautious global miner capex spending budgets driving move towards an uptick in merger and acquisition activity as organic growth prospects remain difficult to achieve. As potential for improved cyclical demand during 2H2025-2026, continued policy and private sector desires to aggressively promotede-carbonize energy combined with structural barriers that we believe will limit efficient and timely delivery of added supplies should support improved market prices. Current global miner valuation that have corrected on a relative and absolute basis and appear better balanced to eventually reflect the prospects of cyclical global economic growth, normalized global monetary policies and muted supply growth. We note a potential reversal of the share upward move in the value of the US Dollar could offer a positive catalyst, as well. We have adjusted our copper and coal price expectations for 2025 and continue to expect slight upward bias. We offer a reduced 2025 average copper price forecast by $0.10 per pound to $4.30 per pound, aluminum at $1.15 per pound, a $2,700 per ounce gold price, up from $2,600 per ounce as we expect continued central bank demand, investor interest as geopolitical and sticky long-term inflation expectations drive investment. We expect coal prices will remain flattish, with possible upside to metallurgical coal if global steel production recovers and thermal as global LNG prices improve.