UBS: Miners' Price Review — De-escalation or Energy Price Shock?
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UBS assesses a binary outlook for industrial metals and mining equities following the Middle East conflict's significant disruption to commodity markets. Copper softened amid global growth concerns, while gold and silver faced headwinds from a stronger US dollar and rising rate expectations. Conversely, aluminum, thermal coal, and iron ore rallied due to Middle East disruption risks, fuel-switching from gas to coal, and rising freight rates.
UBS outlines two distinct macroeconomic scenarios. Under a de-escalation baseline—which assumes an early April ceasefire and the reopening of the Strait of Hormuz—copper prices and related equities are expected to rebound, while aluminum and coal prices should consolidate or correct lower. Alternatively, a prolonged energy price shock lasting beyond two months would create downside risks for copper due to recession fears, while offering further upside for aluminum and coal prices.
The firm trimmed near-term forecasts across several metals but maintains its core expectation for the Strait of Hormuz to reopen in April. Structural demand for copper remains resilient, driven by grid spending and the energy transition, leading to small market deficits in 2026 that widen in 2027 and 2028. For aluminum, ongoing Strait restrictions could trigger further smelting capacity curtailments alongside the 575,000 tonnes already reduced. Top picks include Freeport and First Quantum for copper, Hydro and Hongqiao for aluminum, and Newmont and Franco-Nevada for gold.