Base metals are currently experiencing a tug of war between the energy transition driving up use in certain sectors, and a weak macroeconomic environment weighing on overall demand, according to Bloomberg NEF (BNEF). Inflation in the U.S. and Europe hit the highest level in decades, prompting central banks to raise interest rates in response. Meanwhile, China, the world’s largest consumer of metals, is experiencing a slowdown in critical areas of its economy, such as real estate. Having already experienced a turbulent few years with a pandemic and war in Ukraine, the uncertainty for industrial metals markets is far from over.

The research team at BNEF recently published its 2H Industrial Metals Outlook. The 23-page report takes a look at the global supply and demand for four key industrial metals: copper, iron ore, steel, and aluminum, and includes the first-ever price projections for these commodities through 2027.

BNEF expects global demand for refined copper to rise by 2.6% per year from 2022 to reach 29.8 million metric tons (mt) in 2027. This growth will mainly be driven by the transport and power sectors. Supply from copper mines is forecast to expand by 10% over the same timeframe, to 24.4 million mt. That 5.4-million-ton deficit between primary supply and demand could see prices reach $9,800/mt by 2027, from around $8,200/mt in 2023.

The report projects that global aluminum demand will hit 108.2 million mt in 2027, growing at a compound annual rate of 3.5% from 2022. The momentum reflects the light-weighting of vehicle bodies and electricity grid infrastructure through the substitution of heavier steel. BNEF forecasts global aluminum production will increase by 10% to 77.5 million mt over this time period. The 30.7-million-mt supply shortfall could see prices hit $3,000/mt in 2027, from an expected $2,200/mt in 2023, and could support expansion of recycling efforts.

Demand for steel is expected to grow more slowly, rising by just over 1% per year from 2022 to reach 1.9 billion mt by 2027. As China’s property market struggles, the momentum will mainly come from other Asian countries, especially India. Global steel manufacturing capacity is estimated to tick up by 3% to 2.54 billion mt. Amid continued overcapacity concerns, steel prices are forecast to drop to $537/mt in 2027, down 8.7% from 2023.

For the key steel input, iron ore, global demand is projected to reach 2.24 billion mt by 2027, only climbing by an average of 0.3% per year from 2022. This implies that the seaborne iron ore market will rise to 1.5 billion mt by 2027. The slow growth reflects increasing secondary production. Stagnant global demand and declining Chinese imports could see iron ore pricing to fall to $77/mt in 2027, down from $121/mt in 2022.