KEY POINTS
- Trade tensions could slow global metals markets.
- Policies now prioritize debt control over aggressive investments.
- Mining firms adopt efficient technologies for a competitive edge.
BMO Capital Markets has adjusted its outlook for industrial metals demand in 2025, citing the effects of heightened trade tensions and tariffs.
These developments are projected to weigh on global industrial production, with an estimated 1.8 percent growth, concentrated in early 2025 before slowing in the second half.
“There is no escaping the fact that tariffs are detrimental to the metals and mining sector,” BMO stated in its recent commodity outlook.
According to Northern Miner, the report warns that a potential multilateral trade war involving the U.S., China, Canada, and key Asian and European economies could disrupt previously stable demand projections.
China’s shifting strategies in metals markets
BMO highlights that China’s approach to fiscal policy and industrial activity is undergoing significant change.
While stimulus measures have bolstered metals markets in the past, Beijing is now prioritizing debt reduction and inflation control over aggressive investments.
China’s renminbi depreciation strategy for 2025, potentially lowering its value to 7.5 per dollar, could affect U.S. dollar pricing for commodities like steel, aluminum, and coal.
However, the bank predicts this may simultaneously boost gold demand as investors seek alternatives to navigate market volatility.
Mining sector faces regulatory and technological challenges
The report underscores potential obstacles in mining, including jurisdictional risks and slow project approvals.
Rising resource nationalism, particularly in Africa, could disrupt supply chains, while local opposition may hinder greenfield developments.
On a brighter note, technological advancements in mining, such as flash ironmaking and state-backed recycling programs in China, are poised to transform the sector.
BMO predicts major players will invest in innovative technologies to enhance efficiency and sustainability.
