Among tariff turbulence, pauses and U-turns, steel and aluminum tariffs have remained at 25% on U.S. imports since March 12. President Trump has also ordered the U.S. Department of Commerce to investigate copper imports, which could lead to the imposition of a further tariff. J.P. Morgan Research estimates that around 40% of refined copper demand and around 70% of primary aluminum demand in the U.S. is imported, and over the past three years, imports have also accounted for 20-25% of steel demand. What will be the impact?
How are tariffs impacting the metals and mining sector?
“Tariff-driven cuts to economic growth forecasts and an increased probability of recession this year translate to steep cuts to our metals demand forecasts.”
Gregory Shearer
Head of Base and Precious Metals Strategy, J.P. Morgan
U.S. tariffs are creating global concerns for the metals and mining sector, especially due to the heightened risk of a recession this year. The economic situation is putting pressure on demand and pricing, resulting in lower forecasts from J.P. Morgan Research.
“While President Trump has issued a 90-day pause on most reciprocal tariffs, the growing risk of recession has already weighed on copper prices which were down 10% compared to March’s peak,” said Bill Peterson, senior analyst of Metals & Mining and Clean Tech at J.P. Morgan. “We feel real demand has already taken a hit, with investor sentiment remaining shaky.”
“Tariff-driven cuts to economic growth forecasts and an increased probability of recession this year translate to steep cuts to our metals demand forecasts,” said Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan. The risk of recession in 2025 currently stands at 60% according to J.P. Morgan Research and for base metals, recessions can have a major impact. “Demand cuts and looser balances prompt lower price forecasts as we turn bearish on base metals prices in the near-term,” added Shearer.
“The mining sector is already pricing in a recession scenario,” said Dominic O’Kane, head of EMEA & CEEMEA Mining & Metals Research at J.P. Morgan. “The MSCI World Metals and Mining Index is down around 50% since January 2023 — however, we’re not at trough. There is still so much uncertainty around tariffs and geopolitical risks, against a backdrop of a weakening dollar and rising inflation.”
What could be the impact of a recession?
“The increasingly apparent loss in global demand momentum over the coming months will eventually drive further sustained falls in base metals prices.”
Gregory Shearer
Head of Base and Precious Metals Strategy, J.P. Morgan
According to analysis from J.P. Morgan Research, base metal prices fall by around 30% on average during a recession. However, the relatively more mild recession of 2001 resulted in smaller drawdowns in copper and aluminum prices versus other recessions. “On a monthly average basis, peak drawdowns from the start of the recession were only around 15% in aluminum and around 20% in copper,” said Shearer. “While no two recessions are alike, our economists are currently forecasting a more mild recession for the U.S. in 2025, potentially similar to that of 2001.”
China’s response is important — China accounts for 50-60% of global metals demand and in previous recessions, mining outperformed due to China’s economic stimulus. With China’s growth forecast lowered from 4.6% to 4.1%, a 1 trillion yuan fiscal package is expected in the third quarter of 2025. However, the stimulus package is not expected to include property stimulus, unlike every previous package issued since 2008. “While we believe the pattern of mining outperformance based on China’s stimulus could repeat, it would be contingent on the realization, magnitude and timing of economic policy support,” said O’Kane. “Hopes of accelerated Chinese stimulus and still-firm demand can potentially keep prices treading water for a bit, but we think the increasingly apparent loss in global demand momentum over the coming months will eventually drive further sustained falls in base metals prices,” added Shearer.
Average aluminum, steel and copper price forecasts for Q2 2025
J.P. Morgan Research expects the following averages in the second quarter of 2025: aluminum $2,200/mt, HRC $900/st, copper $8,300/mt.
“We expect a minimum 10% tariff will be applied to copper imports in the future.”
Gregory Shearer
Head of Base and Precious Metals Strategy, J.P. Morgan
Aluminum prices
J.P. Morgan Research forecasts an average price of $2,200/mt for aluminum in the second quarter of 2025. The global demand forecast for aluminum has been reduced to 1% growth year-over-year, down around 1% compared to previous estimates. This would create a surplus of around 200 kmt in 2025.
“We believe aluminum is likely to carry lower downside amplitude in the weeks and months ahead because aluminum typically has higher elasticity of supply vs other metals,” O’Kane added.
Steel prices
U.S. price forecasts
| Scrap ($/lt) | Steel flat products ($/st) | Steel Long Products ($/st) | |||
|---|---|---|---|---|---|
| Shredded | 415 | HRC | 900 | Rebar | 785 |
| HMS | 365 | CRC | 1,120 | - | - |
| Busheling | 435 | Galvanized | 1,200 | - | - |
| - | - | Plate | 1,215 | - | - |
“We have cut our stainless steel demand growth forecast for this year to 5.3% year-over-year as tariffs drive a potentially more material global economic slowdown,” said Shearer. For hot-rolled coil (HRC) steel, Peterson added that “we have revised our forecast 2% lower for 2025 given the quicker-than-expected peak and demand destruction concerns looking ahead. We also cut our scrap forecast for this year by around 7% due to expectations of weaker mill utilization.”
In Europe, “the expansion of EU fiscal policy beyond Germany’s already announced €500 million infrastructure stimulus could lead to a bull-case scenario,” said O’Kane. “However, since European steel equities are positively correlated with European GDP expectations, we believe EU and U.S. growth concerns are now likely to dominate in the second and third quarters.”
Copper prices
Copper prices will average $8,300/mt in the second quarter of 2025 according to J.P. Morgan Research. This is based on a reduced demand forecast — 1.9% demand growth is now expected year-over-year, which is 1% lower than previous estimates. This would see a surplus of around 170 kmt in 2025.
“As the Department of Commerce is conducting an investigation into U.S. copper imports which could authorize future tariffs under Section 232, we expect a minimum 10% tariff will be applied to copper imports in the future,” said Shearer. “Copper prices rallied about 12% from January 1 through to the “Liberation Day” tariff announcement, after which the price corrected 11%. The global growth drag created by U.S. tariffs is likely to be a headwind for prices near term.”
“Supportive Chinese demand, opportunistic buying and firm micro fundamentals did in part support copper prices back above $9,000/mt,” Shearer added. “However, the magnitude of the global demand slowdown we are expecting will soon begin to outweigh firm-for-now Chinese fundamentals, sending prices lower.”
What’s next for metals and mining?
Many uncertainties remain in this outlook, not least due to the global impact of tariffs and the many variables. The U.S. is heavily reliant on aluminum, steel and copper imports, with Europe, Mexico, Canada and Chile some of the major suppliers. Fewer imports would lead to downstream demand destruction, in turn affecting industries ranging from autos to aerospace. “This is where a key question mark comes into our outlook,” said O’Kane. “To what extend will U.S. trade policy have a demand destruction effect, and how will this play out globally? J.P. Morgan Research will be monitoring the situation closely,” he added.
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