Volatility while staying high

New Year highs in copper prices eased off by late January but remain above recent norms as investors turn to commodities.

Prices on the London Metal Exchange (LME) were volatile during the observation period but mostly remained at a high level. Price increases, especially in December and January, were not sustained. Traders remain very cautious, as many analysts’ forecasts on price developments have proved inaccurate – but not all, see below.

Furthermore, European smelters and foundries are still only purchasing small quantities, resulting in a lack of reliable sales within Europe. Exporting to countries outside the EU often remains the only option for reducing existing inventories.

Copper highs

Copper was last quoted on the LME at US$ 12 700 per tonne for the three-month period, well below the US$ 13 000 mark. The red metal had briefly reached a record high of US$ 14 527.50 on the LME before closing on the same day at around US$ 13 600.

The large fluctuations are difficult to explain on fundamental grounds as copper inventories were recently reported to be over one million tonnes. This also demonstrates how unreliable official copper inventories in the LME’s licences warehouses are as these most recently stood at only 224 650 tonnes.

The underlying cause of the high prices appears to be the global economy, which has gone awry with countless tariffs, embargoes and trade restrictions. Confidence in monetary policy is declining and investors are flocking to commodity markets.

Aluminium demand

Aluminium prices in London were recently slightly higher than the beginning of January, which naturally also affected scrap prices. Futures on the LME were last quoted at US$ 3 060 per tonne, while alloy was US$ 2 569 – 2 579. Warehouse inventories reported by the LME amounted to 475 550 tonnes of high-strength aluminium and 1 500 tonnes of alloy.

The supply of aluminium scrap remained high in Europe, while demand from mills was low. This may also be related to the crisis the aluminium industry has been experiencing for some time. According to the German Aluminum Industry Association, production levels are currently only 76-88% of those in 2021. 

The German aluminium industry has stalled for four years. This low-capacity utilisation is a symptom of weak demand in the supplier industries, particularly in the automotive, construction and plant engineering sectors.

Robust growth

A Research and Markets report in mid-January on the non-ferrous metal recycling market globally suggested continuing robust growth, with its valuation set to rise 5.2% this year to US$ 249.23 billion. The automotive and construction sectors are said to be driving the demand for recycled metal products, further fuelling market growth. Technological advancements in sorting and separation are also improving recovery efficiency.

The market is expected to reach US$ 301.77 billion by 2030, a projected cagr of 4.9%.

‘The demand for high-purity recycled metals in electronics and renewable energy sectors is increasing, alongside investments in automated and AI-enabled recycling systems,’ the report says. ‘Additionally, regulators are increasing pressure to reduce carbon emissions, bolstering the adoption of recycled non-ferrous metals.’

The report notes that tariffs on non-ferrous scrap metals are reshaping the market, encouraging regional supply chain development and increased local recycling capacities.

Accurate forecasts

The ceo of US-based Shapiro Metals, Bruce Shapiro, has praised the forecasting skills of market observers in the latest of his blogs on the non-ferrous markets. He cites Ed Meir of Marex, saying his high and low aluminium forecasts were the most accurate in 2025. ‘His delta on the average was -2.74% compared to Reuters’ delta of -2.28%.

The 2026 annual average of LME aluminium for both Ed Meir and Harbor are both very close to US$ 3 250. Of course, nothing is guaranteed and one really never knows.’

Shapiro notes that while US tariffs on aluminium will benefit a few smelters, it is manufacturers and consumers who suffer. ‘Since June when President Trump put a 50% tariff on aluminium and steel, the Midwest premiums and the aluminium prices have gone up every month.

The Midwest premium has gone from the low US$ 0.40s in June to a current US$ 1.04. LME has gone up US$ 600 per tonne during the same time.’

In a previous blog, Shapiro noted that Harbor Aluminum expects firmer US and world aluminium demand, tighter market conditions and yet higher LME prices in 2026. ‘We continue to see an overdue rebound in aluminium end-user demand materialising over the coming quarters amid improved US trade policy and tariff visibility, strong US investment projects, world pent-up demand, restocking needs, world fiscal stimulus and declining interest rates,’ the Harbor analysts say.

Smelter partnership

Emirates Global Aluminium (EGA) and Century Aluminum have agreed a joint venture to build the first new aluminium smelter in the United States since 1980. EGA will own 60% of the project, with Century owning the remaining 40%. The new plant, to be built in Inola, Oklahoma, is expected to produce 750 000 tonnes of aluminium per year, more than doubling current US production.

Currently about 85% of the aluminium needs of American industries are currently met by imports.

Jesse Gary, ceo of Century Aluminum, said: ‘Key industries, such as automotive, aerospace, construction, packaging and, importantly, national defence, stand to benefit greatly from this expanded production of this critical metal, which will create thousands of new American manufacturing jobs.’

Construction is expected to start by the end of the year with production due by the end of the decade.

Meanwhile, container giant Hapag-Lloyd has announced that all shipments of recycled metal and plastic to Southeast Asia require a letter of indemnity.

‘The move reflects carrier risk management rather than government prohibition. By shifting regulatory liability to shippers, carriers are tightening the effective compliance threshold even where formal law has not changed. Similar measures by other lines are expected.’

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