Wiring, Energy, Geopolitics Drive 2025 Metals

Economic

Commodity

Summary:

Political shifts, inflation and geopolitical tensions mean that market volatility will be a key characteristic this year.

Critical metals, uranium and gold will shine this year driven by accelerating deglobalization and energy security demands, Sprott said in a special report Monday.

Broader trade conflicts affecting allies and adversaries alike could reduce business investment and global GDP, while decoupling due to rising protectionism and trade tensions will likely accelerate in sectors that are strategic like AI, advanced technology, finance and defence, the asset management company stated.

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All of this could drive electrification efforts into higher gear and sustain demand for critical minerals, uranium and gold, said Sprott, which manages some $34 billion in assets.

Self-reliance and reduced foreign dependence will be key trends in the energy sector this year as countries further decouple and populist and nationalist ideologies come to the fore. This could augment rivalries over critical resources, with resource nationalism driving energy policy.

Prices of commodities tied to critical energy materials such as uranium, copper and silver are already outperforming those commodities affected most by China’s economic policies such as iron ore and metallurgical coal, and this trend is likely to persist in 2025, Sprott said.

EVs thwarted

President Donald Trump’s intention to roll back policies supportive of electric vehicles and renewables has introduced uncertainty and could include eliminating a $7,500 tax credit for EVs while reducing dependence on batteries and critical minerals from China. But it may boost EV sales in the short term, BMO Capital Markets said on Wednesday.

Trump has signed an executive order cancelling Biden’s target of electric vehicles to be half of auto sales by 2030, and the new president is redirecting unspent government funds for charging stations. The order also seeks to keep combustion engine autos in play longer by tweaking rules for states and the Environmental Protection Administration, but that tactic may be challenged.

If Trump repeals all the tax credits under the Biden-Harris administration’s Inflation Reduction Act, solar, wind and energy storage construction would be 19% less over the next five years, according to an analysis by Bloomberg New Energy Finance (BNEF), a unit of the news wire. But even so, renewables would more than double because they have momentum, it added.

What’s more, a full repeal of existing clean energy legislation “appears unlikely” according to Sprott.

Political shifts, inflation and geopolitical tensions mean that market volatility will be a key characteristic this year, Sprott said. The risk of aggressive tariffs and trade wars “casts a strong shadow on risk assets” and policy uncertainty “could dampen investor confidence.”

Nuclear is back

As a zero-emission, baseload energy source, nuclear energy is well positioned in 2025 to support the energy required in AI’s data centres, machine learning and digital infrastructure. This year Sprott sees “accelerated investment in both AI-driven applications and nuclear energy infrastructure as their synergies become more apparent.”

Prices for uranium in the short-term market hit a 16-year high last year and Sprott, which manages the world’s largest physical trust of the metal at $4.9 billion, says the market for the nuclear fuel will continue to grow and remain in a bull market this year. (The average and maximum uranium spot prices in 2024 were their highest in the last six years.)

“Regardless of spot price movements, uranium’s underlying fundamentals continue to grow stronger, driven by accelerating demand, supply constraints and favorable nuclear energy policies,” Sprott noted.

At the same time, current global uranium mine production is insufficient to meet the world’s nuclear reactor needs and there is a structural deficit. While junior miners are restarting mines due to historically high uranium prices, their efforts will unlikely close the supply-demand gap, Sprott said.

Geopolitics and instability in uranium producing countries like Niger and Russia also adds uncertainty.

Sprott argues that while some utilities are covered, others do not have the appropriate procurement strategies in place.

“We believe that available-for-sale inventories, critical to utilities, have been depleted,” Sprott said. “Utilities’ needs may cascade down the supply chain from conversion and enrichment, where prices are hitting all-time highs, to U3O8 itself.”

Copper imbalance grows

Copper is one of the most compelling commodities this year, according to Sprott. AI and data centres rely on copper for infrastructure and its “new omnipresence in the energy-intensive future of global economies may shield it from tariffs proposed by the incoming Trump administration, a threat that has been weighing on the copper market post-election.”

Supply remains a concern and Sprott expects the supply deficit will widen through 2025 and beyond. Production disruptions are expected to continue in the coming quarters, and insufficient investment in future copper supply is a “critical bottleneck.” Declining grades and long project lead times have also constrained supply.

In addition, tighter availability of copper concentrate could put additional upward pressure on prices, while “overcapacity in the smelting sector adds pressure to the upstream segment of the supply chain and may continue to depress treatment charges.”

The gold price jumped 27% in 2024, largely due to central bank and sovereign purchases, and Sprott expects demand from this sector will continue to lift gold prices this year.

“Most central banks expect the US dollar to decline as a proportion of their total reserves, with gold’s share expected to rise over the next five years,” Sprott said. Inflation and geopolitics will also be supportive of the precious metal in 2025.

Sources：mining.com

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Economic

The Surge in U.S. Corporate Exodus from China

The trend of American businesses withdrawing from China has intensified, with a recent survey by the American Chamber of Commerce in China (AmCham China) revealing that 30% of surveyed companies have either started or are actively considering diversifying their supply chains in 2024. This figure surpasses the previous peak of 24% in 2022 and significantly exceeds the 23% recorded in 2017 when the Trump administration first imposed tariffs on Chinese goods.

The combination of escalating U.S.-China tensions and the lasting economic impact of the COVID-19 pandemic has played a critical role in this shift. Michael Hart, President of AmCham China, emphasized that the strict lockdown measures during the pandemic made businesses aware of their overdependence on China. As a result, supply chain diversification has become an imperative rather than a strategic option.

Alternative Investment Destinations and the Rise of Reshoring

Southeast Asia and India continue to be the top choices for American firms relocating production. However, an increasing number of businesses are also considering moving operations back to the United States, with the proportion rising to 18% in 2024 from 16% the previous year. This growing preference for reshoring aligns with U.S. government policies aimed at reducing reliance on Chinese manufacturing and strengthening domestic production capabilities.

Nevertheless, the survey also indicates that a majority—67%—of U.S. companies in China still do not have plans for relocation, though this percentage has declined by 10 points compared to 2023. This suggests that while many firms are diversifying their supply chains, they are not entirely abandoning China, recognizing its irreplaceable role as a major market.

Key Challenges: Geopolitical Risks and Domestic Competition

Geopolitical friction remains the most significant challenge for American firms operating in China, with over 60% of survey respondents citing U.S.-China tensions as their primary concern for 2025. The second major challenge is the increasing competitiveness of both state-owned and private Chinese enterprises, which pose mounting pressure on foreign firms.

Further complicating the landscape, former President Donald Trump recently announced plans to impose an additional 10% tariff on Chinese imports, set to take effect on February 1, 2025. If implemented, this could accelerate the exit of more companies from the Chinese market.

Economic Deceleration and Changing Market Dynamics

China’s economic slowdown further adds to the uncertainty. Weak consumer spending has persisted since the pandemic, prompting the Chinese government to roll out stimulus measures to revive growth and stabilize the struggling real estate sector. According to the AmCham China survey, the proportion of firms that no longer view China as their primary investment destination has doubled compared to pre-pandemic levels, reaching 21%.

Despite these challenges, analysts highlight that opportunities remain, particularly in sectors driven by domestic consumption. Many technology, industrial, and consumer goods companies still view China’s growing middle class as a lucrative business prospect. Hart reaffirmed that while companies are diversifying, China remains a market of significant scale and importance.

Overall, the increasing relocation of U.S. businesses from China reflects a broader realignment of global supply chains, influenced by geopolitical uncertainty, economic conditions, and policy decisions. While many firms are hedging risks by diversifying into Southeast Asia, India, and the U.S., China continues to be a critical market. The coming years will determine whether this trend remains a measured adjustment or escalates into a deeper decoupling of U.S.-China economic ties.

Source: PBS

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Commodity

Economic

Government Action to Address Food Supply Vulnerabilities

Japan is taking proactive steps to prevent a potential food crisis, with the Ministry of Agriculture, Forestry, and Fisheries (MAFF) drafting a contingency plan to ensure stable supplies of key agricultural products. The proposed measures, presented during a Liberal Democratic Party (LDP) committee meeting, highlight the growing risks Japan faces in securing its food supply.

Under the plan, if domestic production of rice or other essential food items drops by 20% or more—leading to sharp price increases—the government will require farmers to submit plans for increasing production. The directive covers 12 staple food categories, including dairy products, livestock, soybeans, wheat, and sugar.

The proposal, set for approval by the Japanese cabinet on April 1, 2025, introduces penalties for non-compliance, ensuring that farmers adhere to mandated production adjustments. However, these emergency measures will not be enforced if Japan can offset domestic shortfalls through imports.

A Response to Global Food Supply Disruptions

Japan’s growing focus on food security stems from multiple global and domestic challenges. Recent disruptions in agricultural supply chains—driven by extreme weather events and geopolitical conflicts such as the war in Ukraine—have underscored the fragility of global food markets. With increasing unpredictability in food production worldwide, Japan is preparing for potential disruptions that could impact its heavily import-dependent food system.

Japan imports more than 60% of its food, making it one of the most food-import-reliant developed nations. Any global supply chain disturbances—such as export restrictions from key supplier nations—could have immediate and severe consequences on domestic food availability and prices.

Japan’s Aging Agricultural Workforce: A Critical Weakness

One of the most pressing concerns affecting Japan’s food security is the rapid decline of its agricultural workforce. Government data reveal that in 2023, Japan had approximately 1.16 million individuals engaged in agriculture, a staggering drop from 2.4 million in 2000. Even more concerning, only 20% of farmers are under the age of 60, signaling a critical labor shortage that threatens long-term agricultural sustainability.

The diminishing number of farmers, coupled with a lack of young replacements, has raised alarms over Japan’s ability to maintain domestic food production. Without new policies to attract younger generations into agriculture, the country risks becoming even more dependent on food imports, heightening its vulnerability to global supply chain shocks.

Will Imports Be a Reliable Solution?

While the proposed emergency measures primarily focus on increasing domestic production, the government acknowledges that imports will remain a crucial fallback option. If global trade conditions allow, Japan will prioritize supplementing its food supply through imports rather than enforcing production mandates.

However, given rising global protectionism in food exports and unpredictable climate-related disruptions, relying on imports carries significant risks. Countries with strong agricultural production, such as the U.S., Australia, and Thailand, could impose export restrictions in times of crisis, leaving Japan exposed to potential supply shortfalls.

To mitigate these risks, Japan is also investing in diversifying its import sources and exploring technological innovations in agriculture, such as vertical farming and automation, to enhance domestic productivity.

Strengthening Food Security in an Uncertain Future

Japan’s latest food security plan reflects the growing recognition that global supply chains are becoming increasingly fragile. By mandating production adjustments and enforcing compliance measures, the government aims to safeguard domestic food stability in the face of potential crises.

However, long-term challenges remain. Japan’s reliance on imports, coupled with an aging agricultural workforce, poses serious risks to its food security. While emergency measures can provide short-term relief, the country will need to implement broader agricultural reforms—such as incentives for young farmers, investments in sustainable farming technology, and strengthened international trade partnerships—to build a more resilient food system.

As global food security risks intensify, Japan’s ability to adapt and secure its food supply will be a critical factor in maintaining economic and social stability. The coming years will determine whether these emergency measures serve as a temporary fix or the foundation for a more sustainable agricultural future.

Source: Reuters

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Economic

China’s Rising Influence in Russia’s Tech Industry

Since Western technology giants such as Microsoft and Adobe withdrew from Russia following the invasion of Ukraine, Chinese firms have moved in to capitalize on the gap. According to Kommersant, the number of Chinese and Russian IT firms seeking assistance from the Russian-Asian Union of Industrialists and Entrepreneurs (RAUIE) to enter "friendly markets" increased by 18% last year. Notably, Chinese companies accounted for twice as many inquiries as their Russian counterparts.

The rise of Chinese tech in Russia is particularly evident in mobile applications. Chinese-developed apps now make up over half of all downloads on RuStore, Russia’s domestic app marketplace, with gaming applications comprising 75% of the total.

Beyond software, China has strengthened its position in Russia’s broader technology sector. With the Kremlin legalizing cryptocurrency mining and rolling out a digital ruble in 2023, Chinese firms have also expanded their presence in Russia’s blockchain and fintech markets.

Struggles for Russia’s Domestic Tech Industry

While China’s growing role provides Russia with some economic relief, it also underscores the struggles of the country’s domestic tech sector.

Despite a labor shortage across most war-time industries, Russia’s IT sector is experiencing widespread layoffs. The Bell reported that soaring interest rates—set at multi-decade highs by Russia’s central bank to curb inflation—have made it difficult for many firms to sustain operations.

Additionally, Russia has only been able to replace around 30-40% of its foreign software with domestic alternatives, meaning it still relies on third-party imports to bypass sanctions, according to The Moscow Times. This suggests that while China is helping Russia maintain some technological continuity, Moscow has yet to achieve true digital sovereignty.

The Limits of Sino-Russian Trade Growth

Despite record trade figures, the pace of growth in China-Russia economic ties is slowing. Bilateral trade hit an all-time high of $244.8 billion in 2024, but the annual increase was just 1.9%, a stark contrast to the 26% growth recorded in the previous period.

One major factor behind this slowdown is the increasing difficulty of cross-border transactions. Western sanctions have made it harder for Russia to access global financial networks, delaying payments and complicating supply chains.

Nonetheless, China has stepped up its exports of critical machinery, automobiles, components, and computing equipment to Russia, while Moscow continues supplying Beijing with discounted oil and gas. This interdependence has reinforced China’s dominant economic position, further cementing Russia’s reliance on Chinese trade and investment.

Strategic Implications: Dependency or Partnership?

The deepening technological and economic ties between Russia and China raise several long-term questions:

Russia’s Growing Reliance on China: With domestic IT firms struggling and Western alternatives cut off, Moscow is becoming increasingly dependent on Chinese technology. While this allows Russia to function amid sanctions, it also raises concerns about long-term economic sovereignty.

China’s Strategic Leverage: Beijing’s ability to dictate terms in trade and investment agreements with Russia will likely increase, particularly as Moscow’s economic options shrink. This could lead to greater Chinese influence over key Russian industries, including digital infrastructure and telecommunications.

Impact on Western Sanctions: While China’s support has helped Russia mitigate some of the economic fallout from sanctions, it remains to be seen whether Beijing will maintain its current level of engagement. The U.S. and EU could impose secondary sanctions on Chinese firms involved in supplying banned technology to Russia, which may deter further cooperation.

Uncertain Prospects for Russia’s Tech Future

With no clear end in sight for the war in Ukraine, Russia’s economic outlook remains uncertain. While China has stepped in to fill technological and trade gaps, its willingness to sustain this relationship under increasing international scrutiny is not guaranteed.

As a result, Russia faces a paradox: while its partnership with China provides a critical lifeline, it also deepens its vulnerability to shifts in Chinese economic strategy. If Beijing decides to scale back its support—either due to diplomatic pressures or its own economic considerations—Moscow could find itself in an even more precarious position.

For now, China’s expanding role in Russia’s technology market is a testament to both nations' growing interdependence. However, whether this relationship will remain sustainable—or whether it will ultimately place Russia in a subordinate economic position—remains a key question for the years ahead.

Source: Newsweek

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Commodity

Economic

Libya’s Ambitious Expansion Plan

Libya is seeking to restore and expand its oil production capacity after years of disruption. Speaking at the 3rd Libya Energy & Economic Summit in Tripoli, NOC’s acting chairman, Masoud Sulaiman, highlighted the sector’s recent progress, including an increase in crude production to 1.41 million barrels per day (bpd). The corporation now aims to nearly double this figure within three years, provided sufficient investment is secured.

In addition to ramping up crude output, Libya is focusing on enhancing its petrochemical industry and refining capacity. This effort aligns with the country’s broader strategy to increase domestic fuel production and reduce reliance on imports.

With an estimated 48 billion barrels in proven reserves, Libya is a key member of the Organization of the Petroleum Exporting Countries (OPEC) and holds one of the largest oil reserves in Africa. However, its energy sector remains vulnerable to ongoing political instability, which has hindered long-term development and infrastructure investment.

Political and Economic Challenges to Growth

Despite its vast resources, Libya’s oil sector has been plagued by repeated production disruptions since the fall of Muammar Gaddafi’s regime in 2011. Armed conflicts, rival political factions, and labor strikes have frequently forced the shutdown of key oil fields and export terminals.

Securing the necessary funding to expand production is another major hurdle. Libya’s fragmented political landscape makes it difficult to attract foreign investment, as companies remain wary of legal uncertainties and security risks. Furthermore, the country’s reliance on oil revenue—accounting for over 90% of government income—exposes it to price volatility in global markets.

Past efforts to increase production have also been complicated by OPEC's output policies. Libya is currently exempt from OPEC+ production cuts due to its economic and political challenges, but any major increase in supply could affect global oil markets and Libya’s position within the cartel.

Can Libya Reach Its 2 Million bpd Target?

For Libya to achieve its ambitious production goal, several factors must align:

Political Stability: Any long-term increase in production will require a stable government that can implement reforms and attract foreign investment. Ongoing negotiations between rival factions will determine whether Libya can maintain a conducive environment for oil sector expansion.

Infrastructure Development: Decades of underinvestment and war-related damage have left Libya’s oil infrastructure in need of major upgrades. NOC must secure financing to modernize pipelines, refineries, and export facilities.

Foreign Investment and Partnerships: Libya will likely need to strengthen its ties with international energy companies. While some firms remain active in Libya, many are hesitant to commit significant capital due to security risks and regulatory uncertainty.

OPEC Dynamics: As Libya seeks to boost production, it may face resistance from OPEC+ if its increased output contributes to oversupply in global markets. Negotiations with fellow cartel members will be crucial in balancing national ambitions with OPEC’s collective strategy.

A Complex but Lucrative Opportunity

If Libya successfully navigates its political and financial challenges, reaching 2 million bpd within three years could significantly boost its economy and energy sector. However, without stability and investment, its oil industry will continue to face periodic setbacks.

For now, Libya remains a high-risk but high-reward player in the global oil market, with vast untapped potential awaiting the right conditions for full-scale development.

Source: Xinhua

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Economic

Central Bank

The surprising strength of the U.S. jobs market and the stickiness of inflation have led economists to mull what was once unthinkable — a possible interest rate rise by the Federal Reserve this year.

“We now think the Fed’s cutting cycle is over. The risks for the next move are skewed toward a hike,” said Aditya Bhave, senior economist at BofA Global Research, one of the first Wall Street economists to discuss a hike.

Most economists are not willing to go that far. Many are in the camp of Ryan Sweet, chief U.S. economist at Oxford Economics, who said ”a very long and potentially uncomfortable pause is more likely than a hike.”

Not long ago the consensus on Wall Street was that the Fed would cut rates several times in 2025. Activity in derivative markets show traders now only expect slightly more than one rate hike cut this year. Economists at Goldman Sachs and JPMorgan now see the Fed on hold through June. The Fed now has penciled in two cuts for this year.

While a hike is still considered a long shot, the odds of one are no longer zero, said Gregory Daco, chief economist at EY-Parthenon.

This has led to the question of what would it take for the next move by the Federal Reserve to be a rate hike?

Many economists, including Bhave, said that a rate hike would be in play if inflation as measured by the core personal consumption expenditure index moved back above 3%.

The personal-consumption expenditures price index has been the U.S. central bank’s preferred inflation gauge as it has battled the rise in prices over the last few years in the wake of the 2020 pandemic. Its core rate, which excludes gasoline and food, ran at a 2.8% annual rate in November and has been below 3% since last January.

Bhave said he expects core PCE inflation to soften to about a 2.5% rate in the first few months of this year as strong data from 2024 start to fall out of the data. So a move up after that would be remarkable.

“Going from there to 3% would represent a pretty sizable shock,” he said.

Sal Guatieri, senior economist at BMO Capital Markets, agreed that a 3% core inflation rate would get the Fed’s attention but said the labor market would also have to be a lot stronger for the Fed to move.

“We’re a long way from that,” he said.

Another factor that could lead to a rate hike would be if inflation expectations were to pick up, Bhave said.

Consumers are starting to worry about high inflation, according to the latest survey from The University of Michigan. Long-run inflation expectations rose to 3.3% in January, the highest level since June 2008.

Oscar Munoz, chief U.S. macro strategist at TD Securities, said consumers are concerned about Trump’s import tariff policies.

“People are not concerned about inflation right now but it is more about what’s going to happen in the future. That’s where tariff uncertainty comes in,” he said.

This past week Adam Posen, president of the Peterson Institute for International Economics, said the Fed would be boxed into a corner by the inflationary impact of President-elect Trump’s economic policies, compelling the U.S. central bank to hike its benchmark interest rate by the second half of the year. He cited proposed tax cuts, tariffs and immigration policies, but emphasized that Trump’s tax cuts would ignite further inflation by raising the fiscal deficit outlook.

“I expect them to be tightening once the budget goes through this summer,” Posen said, on Bloomberg TV.

Still, Chicago Fed President Austan Goolsbee said Friday said he thought that rate cuts would still happen, but he said if market-based measures of inflation expectations rise, it would be concerning.

Jeffrey Cleveland, chief economist at Payden & Rygel, said the economy was now in the best of both worlds with a healthy labor market and inflation cooling.

Rate hikes are “not in order” because the Fed doesn’t want to tighten financial conditions so much that the labor market would be derailed, he said.

But Bhave said that the economy seems to be thriving with relatively high interest rates.

“We’re not talking about 200 basis points of hikes. It could be back to a rate of 5.5%. Maybe that doesn’t crush the labor market,” he said.

Fed officials have said they are committed to get inflation back down to 2% but don’t want to damage the labor market.

Sources：MarketWatch

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Economic

Economic Growth Projections Cut Amid Structural Weaknesses

Germany's annual economic report, presented by Economy Minister Robert Habeck, paints a bleak picture of the country's economic trajectory. Initially projected at 1.1%, GDP growth for 2025 has now been revised down to just 0.3%, reflecting an economic slowdown driven by multiple structural and external factors.

Inflation remains stubborn at 2.2%, unchanged from 2024, while the unemployment rate is expected to climb to 6.3%, up from 6% the previous year. The most troubling development, however, is the sustained decline in exports, marking the third consecutive year of contraction. With Germany's economy heavily reliant on global trade, this trend signals deeper vulnerabilities.

The Impact of U.S. Trade Policy and Declining Global Demand

A significant risk factor for Germany's exports is the potential for higher U.S. tariffs under President Donald Trump. His administration has hinted at imposing special tariffs on European goods, which could further erode Germany’s export performance. If these measures materialize, German manufacturing—particularly the automotive and machinery sectors—could face severe disruptions.

The German government has acknowledged these risks, urging the European Commission to expedite new trade agreements that would provide alternative markets for German exports. The annual report underscores the necessity of maintaining and expanding trade relations with the U.S., emphasizing that strategic economic ties must be preserved despite political uncertainties.

Industrial Slowdown and Labor Market Struggles

Beyond external trade pressures, Germany’s domestic economic environment remains fragile. The Institute for Employment Research (IAB) has reported that the country’s labor market index fell for the fifth consecutive month, reaching its lowest level since the COVID-19 crisis in 2020. In January 2025, the index dropped to 98.8, well below the neutral benchmark of 100, reflecting worsening employment prospects.

Manufacturing industries, particularly in mechanical engineering and industrial equipment, are facing sharp declines in orders. A survey by the German Engineering Federation (VDMA) found that 34% of its member companies anticipate severe risks to their order books in the next six months. As a result, 25% of surveyed firms are preparing to cut jobs in the near term.

The downturn is not limited to traditional manufacturing. Germany’s electrical and digital industries are also bracing for contraction, with the ZVEI industry association forecasting a 2% decline in output for 2025. According to ZVEI President Gunther Kegel, excessive regulations and high industrial costs are stifling innovation and reducing Germany’s global competitiveness.

A Government Struggling to Respond

Germany’s ruling coalition has faced mounting difficulties in implementing effective economic measures. The so-called Growth Initiative, a set of policies aimed at strengthening the economy, has been only partially implemented due to political instability. The governing three-party coalition collapsed in November 2024, further complicating economic decision-making.

In this context, businesses and investors remain cautious, delaying investments and expansion plans. The combination of political uncertainty, regulatory burdens, and external trade risks has dampened business confidence, leading to weaker economic activity.

Germany’s Economic Challenges Persist

Germany’s downgraded growth expectations reflect broader structural weaknesses that could extend beyond 2025. The country’s heavy dependence on exports, rising labor market pressures, and regulatory constraints are compounding its economic slowdown. Without significant policy adjustments—such as deregulation, investment incentives, and trade diversification—Germany may struggle to regain momentum.

The coming months will be crucial in determining whether Germany can stabilize its economy. If trade tensions escalate and industrial production continues to decline, the risk of a deeper recession will grow. For now, Europe's largest economy faces a difficult road ahead, with limited room for quick recovery.