UBS has raised its projections for base metals, pointing to a stronger macro environment, tighter supply dynamics, and steady demand across key commodities.
In its latest outlook, the bank confirmed it has made “positive revisions to base metals forecasts, with a preference for copper & aluminium,” while cutting estimates for nickel and keeping a cautious approach on zinc.
The team of analysts led by Daniel Major argued that the phase of “maximum uncertainty/instability created by tariffs [is] behind us.” They highlighted U.S. rate cuts, a weaker dollar, renewed AI-driven optimism, and the possibility of further Chinese stimulus as supportive factors for demand.
Industrial metals, they added, are also benefitting from physical market constraints and the likelihood of restocking once autos, construction, and manufacturing pick up momentum.
For copper, UBS lifted its 2025 and 2026 targets by around 3%, now expecting $4.37/lb next year and $4.80/lb in 2026. Analysts see fundamentals strengthening into 2026–27, with growth underpinned by scarce mine supply, pressure on refined production, and structural demand linked to electrification and technology.
“We expect fundamentals to be supportive in 2026/27 with deficits to drive up prices as (1) mine supply growth is limited, (2) refined output will come under pressure, (3) secular growth drivers remain strong, (4) traditional demand drivers will recover,” the note states.
Aluminium projections were also lifted by roughly 5% for 2025–26. UBS pointed to capped production in China and constrained supply elsewhere as key supports, warning the market could tighten further if demand strengthens. The bank expressed a preference for Norsk Hydro (USOTC:NHYDY) over Alcoa (NYSE:AA) and South32 (USOTD:SHTLF), with potential tariff exemptions on Canadian aluminium cited as a possible swing factor.
In contrast, nickel forecasts were reduced by about 5% for 2026–27 amid concerns over oversupply. UBS now expects $7.25/lb in 2026 and $7.50/lb in 2027, down from prior estimates of $7.50/lb and $8.00/lb.
For zinc, estimates were adjusted upward by around 5% for 2025–26, although the bank cautioned that growing supply could ease market tightness over time.
Iron ore projections were also raised by 5% for 2025–26, with prices forecast to hover near $100/t over the next 6–9 months before sliding toward $85–90/t in 2027 as new output drives the market into surplus.
Coal markets remain under pressure, UBS said, as higher Chinese production and recovering global supply weigh on both metallurgical and thermal coal. Still, it expects thermal coal prices to trend upward over the coming year as fundamentals tighten, even though the medium-term picture remains challenged by expanding LNG supply.
These revisions fed into upgraded earnings forecasts for miners, with UBS estimating EBITDA increases of 5–15% and EPS improvements of 5–20%, supported by higher commodity price assumptions and FX adjustments.
The bank also raised its price targets for several producers, reiterating its preference for Anglo American and Teck in copper, Antofagasta as a key pure-play name, and Glencore for diversified exposure, while maintaining a neutral stance on the large iron ore miners.
UBS additionally lifted its precious metals outlook, noting gold and related equities have strongly outperformed in 2025. However, it cautioned that the risk/reward balance is less compelling after the recent surge.
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