The recent energy shock stemming from Middle East tensions could postpone the anticipated recovery in metals demand, according to Bank of America analysts, who noted that historical energy shocks have reduced demand growth by up to 1 percentage point as economic activity stalls.

Metals consumption has shown uneven patterns in recent months, with China’s consumption growth slowing and subdued expansion in the United States and Europe. The bank had previously argued that demand needed to accelerate in the second quarter to sustain the rally as metal prices dislocated from fundamentals.
Copper has struggled to maintain price levels, leading market participants to reduce their positions in the metal. Aluminum has also experienced a correction, despite the Middle East accounting for 9% of global supply.

The conflict’s impact on commodity assets and logistics has become a focal point. Hydro indicated that restarting its 630,000-ton Qatalum smelter could take 6 to 12 months. Qatar stated that repairing damaged sections at the Ras Laffan LNG facility, which represents approximately 3.5% of global supply, could require 3 to 5 years.

Supply chain disruptions have already driven energy prices higher, with concerns about potential shortages that could trigger an economic slowdown in some countries. This has prompted renewed attention to energy security and independence. European Commission President Ursula von der Leyen stated that the world remains too dependent on fossil fuels.

Bank of America noted that both and aluminum could ultimately benefit from the end of hostilities and increased grid spending. may also gain from renewed focus on nuclear energy.

China achieved its 14th Five Year Plan renewables targets ahead of schedule, though grid spending declined in the second half of 2025. There is risk that the country will increase solar and wind capacity by just 200 gigawatts this year, down from 400 gigawatts in 2025, although infrastructure spending may partially offset this decline.

The bank estimates that power generation capacity in China, the US and Europe needs to increase by a minimum of 4%, 2% and 2% respectively each year through 2030. This reconfiguration of the global energy system will require metals, positioning copper, aluminum and potentially uranium as beneficiaries of increased grid investment.
Source: Investing.com