Navigating Geopolitical Storms: Strategic Investment in Industrial Metals Amid Emerging Market Volatility

The industrial metal markets in emerging economies are no longer insulated from the ripple effects of geopolitical fragmentation and trade policy turbulence. From 2023 to 2025, nations have aggressively reconfigured mineral supply chains to reduce reliance on China and other dominant producers, creating a patchwork of bilateral agreements, tariffs, and state-led initiatives [1]. This shift has introduced volatility into pricing and forced investors to rethink exposure strategies.

Geopolitical Risks and Tariff Dynamics

The U.S. has maintained a 25% tariff on imported aluminum since 2023, while new investigations into copper imports threaten further escalation [2]. These measures, coupled with China’s slowing demand for metals like copper and aluminum, have exacerbated global oversupply and downward price pressure [3]. For example, J.P. Morgan Research forecasts an average aluminum price of $2,200/mt in Q2 2025, a 15% decline from 2024 levels [4].

The U.S. Midwest Premium (MWP) for aluminum has surged to a record high of 68.25 cents per pound, reflecting localized demand pressures despite global oversupply [5]. Meanwhile, Trump’s surprise exemption of refined copper from U.S. tariffs in 2025 caused a 22% single-day drop in COMEX futures, underscoring the market’s sensitivity to policy shifts [6].

Mitigation Strategies for Investors

Industrial companies are increasingly adopting reshoring, nearshoring, and strategic partnerships to mitigate geopolitical risks. These strategies align with environmental goals like the EU’s Carbon Border Adjustment Mechanism (CBAM), which incentivizes local production by penalizing carbon-intensive imports [1]. For instance, U.S. steelmakers are leveraging 50% tariffs on imports exceeding 2024 levels to prioritize domestic production, even as trade policy uncertainties threaten to reduce real GDP growth by 0.5 percentage points in 2025 and 2026 [7].

Scrap metal markets also offer a buffer against volatility. Clean copper currently commands over $3 per pound globally, while steel scrap trades between $350 and $550 per ton [8]. Investors with exposure to recycling infrastructure or regional scrap hubs may find opportunities amid these dynamics.

The Road Ahead

Emerging markets must balance the dual pressures of resource nationalism and decarbonization. While J.P. Morgan projects a 1% annual growth in global aluminum demand, the interplay of tariffs, inventory gluts, and shifting trade flows will likely keep prices in a narrow range until 2026 [4]. Investors should prioritize assets with diversified supply chains, regulatory agility, and proximity to low-carbon production hubs.

Source:
[1] Top geopolitical risks 2025: Industrial Manufacturing insights, [https://kpmg.com/xx/en/our-insights/risk-and-regulation/top-risks-forecast/industrial-manufacturing.html]
[2] The Outlook For Aluminum, Steel & Copper Prices, [https://www.jpmorgan.com/insights/global-research/commodities/aluminum-steel-copper-prices]
[3] Mining & metals 2025: Poised on the chessboard of ..., [https://www.whitecase.com/insight-our-thinking/mining-metals-2025-poised-chessboard-geopolitics]
[4] J.P. Morgan Research, [https://www.jpmorgan.com/insights/global-research/commodities/aluminum-steel-copper-prices]
[5] Border States Commodity Update — August 2025, [https://tedmag.com/border-states-commodity-update-august-2025/]
[6] Fastmarkets monthly base metals market update, [https://www.fastmarkets.com/metals-and-mining/base-metals/monthly-base-metals-market-update-2025/]
[7] State of U.S. Tariffs: August 7, 2025, [https://budgetlab.yale.edu/research/state-us-tariffs-august-7-2025]
[8] Scrap Metal Prices 2025: What Drives Value and How ..., [https://www.okonrecycling.com/industrial-scrap-metal-recycling/steel-and-aluminum/current-trends-scrap-metal-pricing/]