This report does not constitute a rating action.
S&P Global Ratings has kept its metal price assumptions steady for 2025-2028, taking into consideration divergent economic factors and focused mostly on the threat of U.S. tariffs (see “Macro Effects Of Proposed U.S. Tariffs Are Negative All-Around”, published Feb. 6, 2025).
Even before any tariff impact, we expected U.S. economic growth to slow slightly in 2025, while the eurozone economy continues its modest rebound from a borderline recession and China’s growth runs below the official 5% target, reflecting overhang of the property sector (see “Global Economic Outlook Q1 2025: Buckle Up”, published Nov. 27, 2024). Despite weaker economic indicators and looming tariffs, metal prices are relatively flat compared with a year ago.
| S&P Global Ratings metal price assumptions | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --Revised assumptions(as of March 5, 2025)-- | --Previous assumptions(as of Oct. 8, 2024)-- | |||||||||||||
| 2025 | 2026 | 2027 | 2025 | 2026 | 2027 | |||||||||
| Aluminum ($/mt) | 2500 | 2600 | 2600 | 2400 | 2500 | 2600 | ||||||||
| Copper ($/mt) | 9300 | 9400 | 9500 | 9300 | 9400 | 9500 | ||||||||
| Nickel ($/mt) | 16000 | 16500 | 17000 | 17500 | 18000 | 18000 | ||||||||
| Zinc ($/mt) | 2700 | 2700 | 2700 | 2600 | 2600 | 2600 | ||||||||
| Gold ($/oz) | 2600 | 2300 | 2000 | 2300 | 2100 | 1800 | ||||||||
| Iron ore ($/dmt) | 100 | 90 | 90 | 100 | 90 | 90 | ||||||||
| Metallurgical coal ($/mt) | 200 | 200 | 200 | 220 | 200 | 200 | ||||||||
| Thermal coal* ($/mt) | 125 | 110 | 90 | 115 | 90 | 90 | ||||||||
| *Newcastle. mt--Metric ton (1 metric ton = 2,205 pounds). oz--Ounce. dmt--Dry metric ton. Source: S&P Global Ratings. | ||||||||||||||
Tariffs push up metal costs in the U.S.
Mining companies indicate only modest profit effects from U.S. tariff proposals, most notably those on Canada and Mexico beginning March 4, 2025. We believe several metals will carry only a 10% tariff as a critical mineral or material: aluminum, copper, nickel, and zinc. The U.S. also has proposed a 25% tariff for all steel and aluminum beginning March 12, 2025. More than half of the value of metal from Canada to the U.S. is steel and aluminum, while gold and copper combined for 21% of the $58 billion (C$83.8 billion) in metal exports to the U.S. in 2023. A tariff on copper imports from Canada, Mexico, and China could push domestic prices higher than global benchmarks.
The U.S. imports copper overwhelmingly from Chile, the world’s largest producer of mined ore. However, China is by far the largest copper refiner, so much of the world’s metal passes through Chinese refineries. Copper is a fungible commodity that trades globally, so prices should reflect the breadth of production costs, including transportation and taxes. Canada and Mexico are the second- and third-largest copper suppliers to the U.S. A tariff on gold imports appears to be just a pure tax on physical transactions into the U.S. because any producer can realize the world price for an ounce anywhere.
S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and possible responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly (see our research here: spglobal.com/ratings).
Steel and aluminum tariffs loom in the U.S.
A 25% tariff on all steel and aluminum imported into the U.S. should boost prices for both metals within the U.S. Already, the price of hot-rolled coil steel in the U.S. jumped 15% off a cyclical low from Jan. 20-Feb. 14, while prices in Asia and Europe stayed flat. The U.S. Midwest premium for aluminum spiked to an all-time high by Feb. 14, contributing to all-in aluminum costs in the U.S. that rival the supply-chain disruptions in 2021-2022. U.S. steelmakers have ample spare capacity and access to inputs to increase volumes by displacing imports, with the profitable umbrella of higher prices for every ton. The U.S. has only four primary aluminum smelters operating, so higher prices only boost those operations’ profitability. Aluminum is one of the most electricity-intensive products in the world, so any incremental smelter output would need enough power for a small city.
Aluminum
We increased our price assumptions less than 5% over the next few years. Prices have held between $2,500 and $2,700 per ton since September 2024, following a sharp jump in alumina prices due to supply disruptions. Despite easing alumina prices, tariffs and geopolitical tensions support higher aluminum prices, while tight inventory increases the risk of supply disruptions. The U.S. Midwest transaction premium surged above 40 cents per pound after announced U.S. tariffs on imports. Trade uncertainties, weak demand and elevated financing costs are constraining premiums across other regions.
S&P Global Commodity Insights expects a very modest surplus in 2025 based on demand growth slowing to 2.4% this year, compared to an estimated 2.7% in 2024. Interest rate relief could benefit automotive and construction markets, but slowing electric vehicle adoption and rising inflation concerns may delay a recovery. While softness in global industrial activity and construction persists, particularly in China, clean energy and energy transition demand offsets some of this weakness.
Longer term, we believe costs will constrain the aluminum supply chain. Market-based energy costs curtailed alumina refining capacity, which led to smelter curtailments, in 2024. Slowing aluminum supply growth and positive long-term demand trends should support higher price assumptions.
Copper
Prices remain $9,000-$9,500 per ton amid a stronger dollar, ongoing geopolitical risks, and trade tensions. Chinese demand appears to remain strong despite the slowing economic growth. Coupled with supply concerns, prices should be steady. The Chinese stimulus program looks encouraging for the property sector. Spending in renewables keeps increasing, with solar power capacity expanding 45% year over year in 2024. We believe the Chinese energy sector will continue to drive growth for base metals.
The supply of copper concentrate is likely to continue struggling to meet demand needs, although that wouldn’t necessarily translate into refined copper deficits because of global smelting overcapacity.
Nickel
We lowered our assumptions almost 10% over the next few years, primarily reflecting an expectation of a healthy surplus of the metal in the market in the coming years. Indonesian supply continues to expand steadily with estimated 12% growth in 2024. The Indonesian government recently approved nickel ore mining quotas of up to 298.5 million wet tons for this year, a further 9.8% increase from the amount mined in 2024, despite earlier expectations that it might lower quotas.
On the demand side, the market is not receiving support from the battery segment, which was flat in 2024, as most new electric vehicles in one key market, China, now run on nickel-free batteries. Stainless steel thus remains the key demand growth driver for now. With a healthy surplus in the market, nickel stocks have risen recently and will likely reach pre-pandemic highs this year, adding additional pressure to prices. However, prices below $16,000 per metric ton are uneconomical for a sizable portion of nickel production, which should prevent a material drop below this level. Longer term, we expect demand, notably in the battery segment, to pick up, providing some support to prices. Facilities under construction in Europe and the U.S. will rely on nickel-based chemistries. Also, ore grades are gradually deteriorating in Indonesia, where it will be more expensive to produce the metal. We therefore expect slightly higher prices in the long term at $17,000 per metric ton.
Zinc
We increased our assumptions almost 5% for 2025-2027 to $2,700 per metric ton. Zinc prices rose for most of 2024 on demand tailwinds including stimulus in China to support the property market recovery. Further, supply remains constrained with inventories declining in recent weeks, and China’s refined output had decreased 6.2% year over year in 2024, with scarce concentrate. Spot treatment charges have been slowly but evidently increasing, away from negatives, which should support some price uplift. Smelter profitability still faces uncertainty, with potential shutdowns that could exacerbate the refined supply squeeze and raise prices. Overall, we believe the mix of sentiments for the upcoming months and year should largely keep zinc moderated but higher, with larger fundamental shifts coming toward the end of the decade.
Gold
We raised our assumption significantly to $2,600 per ounce for 2025, up from $2,300. Our third-year assumption in 2027 is $2,000 per ounce for the first time ever. Gold has risen considerably over the past few months, hitting all-time highs in recent weeks and an average of about $2,900 per ounce in February. In our view, gold’s recent ascent stems in part from its perceived safe-haven status that appeals to investors, particularly central banks, in the face of increased uncertainty. Trade tensions have escalated in recent weeks following tariff announcements by the Trump administration on some of the U.S.’s largest trading partners, raising market concerns for higher inflation and slower global growth if supply chains become disrupted and operating costs increase. We think these uncertainties, combined with ongoing geopolitical conflicts and high sovereign debt, will likely support gold prices above our previous estimates.
We assume gold will settle longer term at $2,000 per ounce by 2027, considering the normal cyclicality. We recognize the case for a price sustained above our estimates, but gold often retraces unexpectedly for several years from records. Therefore, our assumptions for many commodity metals will often point down from peaks and up from troughs. The gradual decline we assume beyond this year also incorporates the view of S&P Global economists that average 10-year treasury yields will remain above 3%, well above pre-pandemic levels, and that core inflation will decline to the low-2% area. As inflation declines while policy and market rates remain elevated, sustained positive real interest rates could pressure gold prices further.
Although our higher assumptions will strengthen credit measures for most gold producers we rate, we don’t anticipate imminent rating actions for senior producers. Most of these issuers have benefited from several years of strong prices that increased cash flow sharply and improved leverage, while producers distributed excess cash to shareholders. In these cases, business risk or financial policy considerations constrain rating upside. Furthermore, given the price volatility and mining companies’ high operating leverage, we continue to incorporate a potential impact of a drop on their credit measures. That said, credit profiles for some mid-tier gold producers we rate that have more leveraged financial risk profiles could strengthen under our revised price assumptions. Higher adjusted EBITDA and operating cash flow than our prior estimates could partly offset the financial risks from earnings volatility and large development projects.
Iron ore
We held our price assumptions of $100 per dry metric ton for 2025 before it trends down to $90 through 2026. Iron ore pricing will continue to be driven by China’s dominance as the largest global steel producer, with output plateauing at about 1 billion metric tons. Prices have stabilized at about $100 amid Chinese stimulus measures in the fourth quarter of 2024.
We believe iron ore will be relatively stable in the next 6-12 months as China demand is supported by current steel production rates. That said, we continue to see more downside than upside risks through 2026-2027, notwithstanding a modest February rally from supply disruption because of tropical cyclones. Any worsening of the protracted weakness in the key Chinese property market could reduce steel production because development accounts for about one-quarter of steel production.
In addition, we believe the Chinese steel sector is increasingly exposed to geopolitical risks through tariffs. This reflects the increased reliance of this sector through about 100 million tons exported in 2024 as well as indirect steel exports through products such as autos, particularly electric vehicles into Europe and the U.S.
We also see mounting supply-side risks to iron ore pricing emerging in the next 24 months. Apart from incremental supply from the major iron ore producers, Rio Tinto Group’s Simandou project in Guinea will add to supply in 2026 into 2027.
Metallurgical coal
We lowered our 2025 price assumption to $200 per metric ton, reflecting a potential glut in the seaborne coal market following China’s recent tariff hike on U.S. coal. China imported 10.7 million tons of U.S.-origin metallurgical coal in 2024, about 9% of its total imports. A substantial portion of this volume could now be redirected to India, putting downward pressure on prices for Australian-origin cargoes.
With the property sector remaining a drag, we do not expect a near-term recovery in Chinese domestic steel demand. This, coupled with lower export prospects due to trade protectionism, could affect steel production. We now expect Chinese steel production to plateau at about 1 billion tons in 2025, before trending down in 2026 and beyond.
We are holding our price assumption at $200 per metric ton beyond 2025 since we expect steel production excluding China to increase 3.3% in 2026, compared with our projection for 2.6% growth in 2025. Much of this will come from India, Europe, and North America, supporting metallurgical coal prices. That said, unforeseen supply disruptions caused by adverse weather and geopolitical conflicts could drive prices higher.
Thermal coal
We raised our assumptions for 2025 and 2026 to reflect our expectation that the global shift away from coal-fired power generation has been delayed. This is mainly due to the rising significance of energy security amid geopolitical tensions and supply disruptions, which has been more prominent in the last three years.
We assume thermal coal will average $125 per metric ton in 2025 and $119 in 2026, down about 7% and 12% respectively from a $135 yearly average in 2024. This reflects our view that demand for Newcastle Australia high-grade thermal coal will decline only moderately in 2025. Key importers such as Japan, Korea, and Taiwan will continue to import Australian thermal coal in the short term. But the acceleration of more power generation from other energies in 2026, such as nuclear, will exert higher pressure on prices.
Although we expect thermal coal demand growth from China will slow this year due to weaker economic growth and increased substitution from renewable energy, thermal coal imports by China will likely remain relatively high in 2025, following the record levels of 2024. Seaborne coal prices will fall, and domestic output will be stable before more new production capacity comes onstream from 2026 onward. Meanwhile, demand from India and Southeast Asia will remain robust, even though these nations import less high-grade coal.
Our assumption for 2027 is $90 per metric ton because we believe prices will ease as both demand and supply continue to decline, in line with these countries' decarbonization targets.
Related Research
- Macro Effects Of Proposed U.S. Tariffs Are Negative All-Around, Feb. 6, 2025
- Global Economic Outlook Q1 2025: Buckle Up, Nov. 27, 2024
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