Have Base Metals Decoupled from Global Growth?

For decades, base metals such as copper, aluminium, nickel, zinc, and lead traded as a reflection of global growth. Prices typically moved in lockstep with industrial activity and were closely correlated with global growth proxies such as oil and iron ore. This relationship held remarkably well across multiple cycles, including China’s industrialisation, the post-GFC recovery, and the post-COVID rebound.

But something changed in 2024.

In my earlier work on an AI-driven commodity supercycle, I highlighted how the multi-year hyperscaler capital expenditure boom created a powerful and persistent demand shock. That surge has already pushed copper and aluminium away from their historical relationships with other commodities. Copper, in particular, long regarded as the most reliable barometer of global growth, began to decouple from oil and iron ore as hyperscaler capex accelerated. Aluminium followed closely, reflecting its role as a partial substitute for copper in electrical and transmission applications.

Source: Iress

This raises a broader question: are all base metals still part of the same macro trade, or have they, like copper and aluminium, begun to disconnect from traditional growth proxies?

Prior to 2024, most base metals were broadly synchronised. Much like iron ore and oil, they largely traded as a highly correlated basket tied to industrial production, construction, and manufacturing demand. Emerging evidence suggests that this uniformity is beginning to fracture.

Nickel illustrates how idiosyncratic supply dynamics can overwhelm macro forces. Prices surged in 2021–2022, driven by strong post-COVID stainless steel demand and a historic short squeeze following Russia’s invasion of Ukraine. That rally proved short-lived. Indonesia rapidly expanded production, eventually accounting for roughly 60% of global nickel output, pushing the market into surplus and suppressing prices.

More recently, Indonesia has begun to flex its market influence. After years of weak nickel prices, the government raised production royalties in April 2025—a rare move in a soft market—and by the end of the year sharply reduced 2026 quotas by close to one-third. By using its dominant supply position to restrain output, Indonesia has effectively attempted to establish a price floor, with nickel rebounding from multi-year lows. While it is uncertain whether this cartel-like behaviour will sustain, it illustrates that nickel is increasingly driven by policy and supply management rather than global growth.

Zinc, copper, and aluminium are often grouped together as proxies for industrial health due to their heavy use in construction. Yet each metal has distinct drivers. Copper is central to electrification, grid expansion, and electric vehicles. Aluminium is critical for transport and power infrastructure, benefiting from lightweighting trends and substitution away from copper. Zinc has traditionally been more cyclical, with over half of demand tied to galvanising steel for buildings, infrastructure, and manufacturing.

The price strength of zinc alongside copper and aluminium in 2025 was largely coincidental. It was driven more by regional and logistical disruptions than by fundamental supply-demand imbalances. While much of the new supply was directed to China, disruptions in Western supply chains created a temporary physical squeeze. These factors pushed zinc prices higher in the near term, even though persistent global surpluses are expected to keep long-term prices under pressure.

Lead, by contrast, has fully disconnected from its peers. The market is structurally oversupplied, and demand growth has stalled. Lead’s primary use remains lead-acid batteries for internal combustion vehicles, but as electric vehicles gain share, long-term demand is declining. High recycling rates continue to flood the market with secondary supply, compounding the challenge. Unlike copper or aluminium, lead has little exposure to AI infrastructure or energy transition, leaving it trapped in a secular downtrend largely disconnected from both global growth and technological change.

Taken together, these divergences show that base metals are no longer a single trade. The AI and electrification boom is selectively driving demand for metals like copper and aluminium, while others—such as nickel, zinc, and lead—are increasingly shaped by supply dynamics, policy interventions, and structural demand shifts. The era of treating base metals as a uniform macro basket is over. In this cycle, the metals that will matter most are those aligned with long-term technological trends, while those tied to legacy industrial markets face a more uncertain outlook.