Renewable Energy and AI: Catalysts for Growth in the Metals Market

This time last year, we examined the metals industry. We’re revisiting the industry with insights from Atradius Senior Underwriter AJ Cobos.

In 2023, the metals industry had numerous growth opportunities linked to technology and renewable energy markets, and this trend continues in 2024. Copper plays a crucial role in the energy transition, driving both demand and supply growth. Experts expect copper prices to rise in the coming months. Rare earth metals like cobalt, lithium, copper, and nickel are vital for battery production, which supports renewable energy. Additionally, copper is essential for data centers, AI, and computing, making the industry’s outlook very optimistic.

Inflation has increased in the past 40 to 60 days and remains stubbornly high. The market no longer predicts six rate cuts in 2024. US steel demand continues to show strong fundamentals, with expectations for growth in 2024. Steel prices have stabilized in the low $800s after a brief rally, while copper is nearing record highs due to strong demand from the renewables and AI sectors.

According to S&P Global, the US steel industry benefits from the CHIPS Act, infrastructure bills, and a significant factory construction boom. Demand from the construction sector and higher scrap pricing have kept US rebar prices above historic levels, with less downward pressure compared to hot-rolled steel coil prices in 2024. Discussions on sustainable materials are increasing, particularly among OEMs seeking steel with lower CO2 emissions. Consequently, some steel plants and rolling mill operators are switching to hydrogen, which can reduce emissions by up to 95% compared to traditional steelmaking.

We remain focused on the macroeconomic indicators and geopolitical risks that influence the industry’s cyclical nature. Stay up to date on the metals industry here.