Metals Outlook for 2025

Stable prices and resilient demand support the sector, but tariffs and geopolitical tension threaten growth prospects

In 2024, despite some volatility, industrial metal prices remained broadly stable (on average increasing by about +5% y/y) and at relatively high levels. Demand remained resilient, while lingering supply constraints allowed prices to stabilise. Production of basic metal and metal products grew by about 3.5% in 2024, while sales grew by close to +4%. Furthermore, as input prices were mostly stable, the global metals and mining sector was able to improve its profitability. Net income grew by about +15% p.a. over the last five years and revenues increased by close over +22% p.a. over the same period. Over the next five years, revenues are expected to grow by over +40%. However, the current environment, with high uncertainty due to US tariffs, ESG backlash and geopolitical tensions, threatens the sector’s potential growth.

Sources: Oxford Economics, Allianz Research. 

Looking ahead, we see a number of key trends and challenges that will shape the industry:

1. Interest rates: Most central banks around the world decreased interest rates over 2024. However, with inflationary risks growing, monetary policy easing could come to an halt. Such developments could harm highly capital-intensive sectors such as metals.
2. Trade policies & geopolitical tensions: Steel, aluminum and other metals such as rare earths have been core to recent trade policies especially in the US and in China as trade tensions are mounting between the two superpowers.
3. Public policies on critical materials: In recent years, most advanced countries have identified what they consider critical materials and minerals, establishing roadmaps to boost production and ensure a stable supply (e.g., the US Energy Act, the EU Critical Raw Materials Act). These policies could have a substantial impact on firms operating in the sector.
4. Green regulations: From electric vehicle policies to heat-efficiency standards for construction to the EU’s carbon border adjustment mechanism (CBAM), various regulations and green policies could impact the sector’s demand and profitability.
5. Exploration & mining projects: As the metals sector has been chronically underinvesting, looking out for exploration projects/budgets is key to assess the sector’s future growth.

Figure 2. Volatility of industrial metal prices (1-month price volatility)

The metals sector, encompassing basic metals, metal products, castings, non-ferrous metals and iron & steel, generated approximately GBP62bn in sales in the UK in 2024, reflecting an increase from GBP60bn in 2023 (see Figure 3). In 2025, the industry is expected to face a slight contraction, with volumes projected to decline by -2% y/y. Additionally, slightly lower prices will contribute to a -3% y/y drop in overall turnover, marking the first year of decline since the pandemic. Despite these challenges, the sector may find some relief as construction activity is poised to rebound after a couple of challenging years. In this context, the operating surplus of the metals industry is projected to decline slightly by about -1.5% y/y in 2025. Liquidity conditions in the sector remain relatively stable, as indicated by the Day Payables Outstanding (DPO), which stood at 40 days at the end of 2024, in line with the global industry average.

Figure 3. UK metals sales (y/y% change)

Download