- Antofagasta, Anglo American and Fresnillo in focus as tariff shock dents short-term demand outlook
UBS has cut its 2025 and 2026 price forecasts for industrial metals by around 10%, warning that the sharp escalation in US trade tariffs has delivered a fresh shock to global commodity markets.
The bank said the new measures, announced on “Liberation Day” by the Trump administration, were materially worse than expected and are likely to weigh on demand across key metals including copper, aluminium and zinc over the coming year.
For UK investors, the spotlight is on London-listed miners Antofagasta PLC (LSE:ANTO), Anglo American PLC (LSE:AAL), South32 Ltd (LSE:S32, ASX:S32, OTC:SHTLF, JSE:S32) and Fresnillo PLC (LSE:FRES), which are all exposed to the industrial metals or gold trade.
Target prices cut
UBS cut its price target on South32 from £1.90 to £1.50, citing its sensitivity to near-term aluminium weakness, while Fresnillo was recently upgraded amid rising investor appetite for gold in an increasingly volatile macro environment.
The Swiss bank expects the trade tensions to disrupt physical metals markets well into 2025, even if a new deal is struck in the meantime.
The fallout is likely to dent corporate capital spending and consumer sentiment, while also reversing pre-tariff inventory build-ups. That’s expected to hit near-term demand, particularly in China, which remains the world’s largest buyer of industrial metals.
The bank is still constructive on the medium-term picture. It forecasts that demand will return to trend levels over the next 12 months, with support from Chinese stimulus and structural themes like electrification and energy transition.
Copper deficit
From 2026, UBS expects copper, aluminium and zinc markets to move into deficit, helped by years of underinvestment and delays in new project approvals. This tightening in supply is likely to drive prices higher over the medium term.
Among UK names, Antofagasta remains a preferred pick for copper exposure, with attractive near-term volume growth.
Anglo American is highlighted for its re-rating potential through restructuring, particularly given its copper weighting. UBS sees both companies as well positioned to benefit from the longer-term recovery, even as near-term earnings expectations are trimmed.
On the precious metals side, UBS believes the current macro backdrop is increasingly supportive for gold.
With prices above $3,000 an ounce, the bank expects upgrades to consensus forecasts as investor demand strengthens.
Gold hedge
Gold’s role as a hedge against geopolitical risk, inflation and dollar exposure is becoming more central again, and UBS sees Fresnillo and Endeavour as the strongest UK-listed names to play that theme.
While risks remain in the short term, particularly around further trade policy shocks and weaker Chinese growth, UBS maintains that UK mining stocks with quality assets, copper exposure and balance sheet strength are well-placed to weather the storm and benefit from a medium-term recovery.