Bank of America: Middle East Energy Shock May Delay Metal Demand Recovery

Investing.com – U.S. bank analysts say that recent Middle East tensions triggering an energy shock could delay the expected recovery in metal demand. The analysts note that historically, energy shocks have led to demand growth declines of up to 1 percentage point, due to economic activity stalling.

In recent months, metal consumption has shown uneven trends, with slowing growth in China and relatively weak expansion in the U.S. and Europe. The bank previously pointed out that as metal prices diverge from fundamentals, demand needs to accelerate in the second quarter to maintain upward momentum.

Copper prices have struggled to sustain levels, leading market participants to reduce holdings. Aluminum prices have also retreated, despite the Middle East accounting for 9% of global supply.

The impact of conflicts on commodities and logistics has become a focus. Heidru said restarting its 630,000-ton annual capacity Calatum smelter could take 6 to 12 months. Qatar stated that repairing damaged parts of the Ras Laffan liquefied natural gas facility could take 3 to 5 years, which accounts for about 3.5% of global supply.

Supply chain disruptions have driven up energy prices, raising concerns about potential shortages that could slow economic growth in some countries. This has renewed focus on energy security and independence. EU Commission President Ursula von der Leyen said the world remains overly dependent on fossil fuels.

U.S. banks note that copper and aluminum could ultimately benefit from the end of hostilities and increased grid investments. Uranium may also benefit from renewed interest in nuclear energy.

China has met its “14th Five-Year” renewable energy targets ahead of schedule, despite a decline in grid spending in the second half of 2025. The country’s solar and wind capacity additions this year may only reach 200 GW, below the 400 GW target for 2025, but infrastructure spending could partly offset this decline.

The bank estimates that by 2030, power generation capacity in China, the U.S., and Europe will need to grow by at least 4%, 2%, and 2% annually, respectively. This restructuring of the global energy system will require metals, making copper, aluminum, and potentially uranium beneficiaries of increased grid investments.

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