BMO on high metal prices: supply squeeze, weak demand – key signals for mine planners
Reviewed by Joe Ashwell
First reported on MINING.com
30 Second Briefing
High base metal prices are being driven by tight supply rather than industrial demand, with BMO’s Helen Amos noting Chinese crude steel, copper and zinc consumption stayed sluggish in November–December despite manufacturing PMIs expanding in over half of major economies. Iron ore rose 4% to US$106/t in 2025, copper about 50% to US$5.89/lb (a post‑2011 high) and zinc 15% to US$1.52/lb, even as Chinese construction logged a sixth straight year of falling floor starts and negative flat steel margins. The main demand bright spot is autos, with 2025 light‑vehicle sales at 91.7 million units and EV sales up 20% to 20.7 million, reinforcing transport as a key metals offtake counterweight to weak Chinese building.
Technical Brief
- BMO links manufacturing expansion mainly to monetary easing in western economies and clearer post‑deal US‑China tariffs.
- Study group data cited by Helen Amos show Chinese crude steel, copper and zinc demand stayed sluggish in Nov–Dec 2025.
- Purchasing manager index growth outside North America appears driven by new orders and lower import costs, not heavy restocking.
- 2025 marked the sixth straight annual fall in Chinese floor starts and the second consecutive drop in completions, deepening construction‑related metals weakness.
- BMO’s late‑2024 downgrade of 2025 metals demand was tied to expected higher tariffs and trade frictions ahead of Trump’s inauguration.
- Global light‑vehicle sales reached 91.7 million units in 2025 versus 89.9 million in 2019, signalling post‑pandemic normalisation of automotive metals offtake.
- Electric vehicle sales climbed to 20.7 million units in 2025, with Benchmark Minerals estimating a 20% year‑on‑year increase in EV‑linked metals demand.
- With autos now the second‑largest metals consumer by tonnage after Chinese construction, portfolio planning must rebalance exposure between building and transport cycles.
Our Take
With copper up about 50% to US$5.89/lb while iron ore has only moved roughly 4% to US$106/t, the current price spread favours copper-heavy portfolios over steel and iron ore exposure in our Mining coverage, particularly for producers that can defer steel-intensive capex.
China’s six-year decline in floor starts and two-year decline in completions, alongside only modest iron ore price gains, suggests project teams in steel- and rebar-intensive segments should be stress-testing demand scenarios more aggressively than those in copper-linked electrification supply chains.
Global light-vehicle sales returning to around 92 million units with EVs at 20.7 million units implies that copper and base metals demand is increasingly tied to drivetrain mix rather than total vehicle volumes, which affects long-term planning for assets like Codelco’s Gabriela Mistral that feed the EV and grid build-out themes seen across our copper pieces.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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