Will AI demand help metal industry extract value?

Key Concepts

• Precious Metals Rally: Significant price increases in gold, silver, and platinum, with copper experiencing substantial growth.
• AI & Data Center Demand: Increasing demand for metals (particularly copper and silver) driven by the growth of Artificial Intelligence and associated infrastructure.
• Delocalization/Reshoring: Shifts in manufacturing and supply chains impacting metal demand.
• Copper Supply Constraints: Challenges in increasing copper supply coupled with rising demand and potential tariffs.
• Iron Ore Undervaluation: A contrarian view suggesting iron ore is overlooked despite favorable supply-side dynamics.
• US Import Tariffs (Copper): Anticipation of potential tariffs driving inventory build-up in the US.
• Macro vs. Micro Drivers: The interplay of broad economic factors (US dollar, emerging markets) and specific metal-related factors (supply disruptions, AI demand).

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Precious Metals & Commodities Outlook to 2026

The interview with Helen Amos, Managing Director and Commodities Analyst at Beimo, focuses on the current strength in the metals market and provides a forward-looking perspective for 2026. The discussion highlights continued opportunities in precious and base metals, driven by a combination of macroeconomic and microeconomic factors.

2025 Performance & Carryover to 2026

2025 was a remarkably strong year for metals, with returns ranging from 60-150% for precious metals and a 40% increase for copper. Amos believes this positive momentum will continue into 2026, citing both macro and micro drivers. Specifically, she identifies a weakening US dollar, strong demand from emerging markets, and the ongoing trend of delocalization as key macroeconomic factors. On the micro side, strong fundamental stories for specific metals – particularly copper, aluminium, and gold – coupled with new investment flowing into the sector, underpin her optimistic outlook. She advises clients against “fading this rally” suggesting it’s premature to take profits.

Copper: Demand, Supply & Tariffs

Copper is a central focus of the discussion, with its price reaching new record highs. Amos attributes this to a robust demand story fueled by end-use applications in renewable energy, grid infrastructure, data centers, defense, and reshoring of manufacturing, alongside strong demand from India. However, supply-side frictions are equally important. Major mines have experienced outages or reduced production, making it difficult to increase supply quickly.

A significant factor impacting copper prices is the build-up of inventories in the US, driven by anticipation of potential import tariffs. The US government has recommended a 15% tariff on refined copper starting in 2027. This expectation is creating a price differential between the US and the rest of the world, incentivizing physical traders to import metal into the US, thereby reducing liquidity and supporting prices globally. Amos explains that as long as the tariff prospect remains, this dynamic is likely to continue.

AI & Data Center Impact

The growing demand from the Artificial Intelligence (AI) sector is also contributing to the positive outlook for metals. While current copper demand from data centers is estimated at around 1% of global demand, the influx of generalist investors attracted by the AI narrative is injecting capital into the metals and mining space. Amos emphasizes that the pipeline of data center construction remains strong, further supporting demand for copper, aluminium, silver, and other critical minerals. She notes that supply-side surprises are unlikely, reinforcing the positive demand outlook.

Iron Ore: A Contrarian View

Amos presents a contrarian perspective on iron ore, arguing it is consistently overlooked by the market despite its favorable supply-side characteristics. She believes the bearish narrative surrounding iron ore is overly pessimistic and that consensus forecasts are consistently too conservative.

Unlike copper, iron ore’s strength isn’t primarily driven by demand from sectors like AI. Instead, it benefits from a highly consolidated industry with limited new capital expenditure (CAPEX). This CAPEX discipline keeps prices above the cost curve, and the market’s efficient cost curve structure ensures that marginal supply quickly exits when prices decline. Amos highlights that the current quarter is seasonally strong for iron ore and other steel-making materials, suggesting a potential “surprise” positive performance in the year ahead.

Logical Connections & Synthesis

The interview establishes a clear connection between macroeconomic trends (delocalization, currency fluctuations, emerging market growth) and specific metal demand. It then layers on microeconomic factors – supply constraints, tariff expectations, and the impact of emerging technologies like AI – to provide a nuanced outlook for each metal. The discussion demonstrates how these factors interact to create a favorable environment for metals investment, particularly in copper and iron ore.

Notable Quote:

“It’s a very consolidated industry [iron ore]. So there are a few industry players…and what we're seeing essentially is capex discipline or restraint.” – Helen Amos, highlighting the supply-side dynamics driving her optimism for iron ore.

Conclusion:

The interview with Helen Amos paints a bullish picture for the metals market heading into 2026. While acknowledging the complexity of the global economic landscape, she emphasizes the strength of fundamental drivers, particularly for copper, aluminium, gold, and surprisingly, iron ore. The key takeaway is that the current rally is not expected to end soon, and investors should consider maintaining or increasing their exposure to these metals. The anticipation of US tariffs on copper and the growing demand from the AI sector are particularly noteworthy factors to monitor.