Volts and Vaults: Where Industrial Demand Meets Precious Momentum

Investors’ interest in industrial metals such as copper, nickel, aluminum, silver, and platinum has continued to deepen. Investors consider these metals as long-term strategic holdings rather than short-term cyclical trades, and traditional demand from manufacturing and construction remains important. 

But the dominant force shaping allocations today is thematic: the global energy transition, electrification, and the exponential rise of AI and data infrastructure. Each metal has played—and continues to play—a distinct role in this transformation.

Copper: The Conductor of the Energy Transition

We believe copper remains the standout beneficiary of global electrification. Demand tied to electric vehicles (EVs), renewable energy installations, and grid modernization has more than offset weakness from China’s property downturn and cyclical demand sectors around the globe. More recently, AI-related demand and defense has picked up and is expected to accelerate in the coming years.

In addition, recent supply disruptions at key mines (such as the Grasberg mine in Indonesia and the Kamoa-Kakula mine in the Democratic Republic of Congo) have reduced supply growth in an already tight market, which may likely drive global balances to deficits next year.

Meanwhile, copper tariff risks have not eased completely, drawing metal into the United States and increasing inventories domestically while tightening liquidity elsewhere. Investor positioning remains high but not excessive, reflecting a sense of optimism for the metal. And although copper prices could face cyclical headwinds in a low-growth or high-inflation environment, we believe the structural case remains strong.

Nickel: Oversupply Meets Evolving Technology

Nickel demand has soared in recent years because of its use in batteries and the broad trend of electrification, but new battery chemistries have taken away some of the initial optimism. While battery storage systems might still be a catalyst for nickel demand, we believe that demand expectations have somewhat softened. 

On the supply side, Indonesia’s rapid capacity expansion has reshaped global supply chains, pushing prices lower and compressing margins for producers elsewhere. Capacity reductions in Australia and New Caledonia also underscore the strain of persistent oversupply.

And despite the Indonesian government’s attempts to curb incentives for additional nickel production unless tied to value-chain investments, oversupply will likely continue. However, as AI and data centers compete for power, we may see some green shoots from Indonesian nickel supply. 

Despite these challenges, we still view nickel as a critical enabler of the battery ecosystem and a pillar of the clean energy transition.

We view nickel as a critical enabler of the battery ecosystem and a pillar of the clean energy transition.

Aluminum: Lightweight Metal, Heavy Demand

Traditionally linked to construction and manufacturing, aluminum demand has been increasingly driven by its use in renewable and grid infrastructure, EVs, AI, and data centers. While exposure to China’s property market still weighs on demand, energy transition themes have helped offset the metal’s cyclical drag.

However, environmental and energy costs appear to be shaping production trends. China’s smelter expansions have slowed, and production has faced annual caps amid high-carbon intensity and stricter environmental rules, while Indonesia continues to add capacity supported by its bauxite export ban. 

But over the long term, the European Union’s Carbon Border Adjustment Mechanism (CBAM), a policy tool used to address carbon leakage and encourage global emission reductions, could challenge the competitiveness of high-emission producers.

Silver: Dual Roles in Solar and Store of Value

Silver is both a precious and an industrial metal. The expansion of solar installations has been a major demand growth driver over the last few years (specifically in China), but recent policy shifts may somewhat soften the momentum.

At the same time, silver continues to attract investors as a safe-haven asset, benefiting from spillover effects from gold and broader portfolio diversification trends. It was the standout metal in 2025 in terms of performance, shining brighter than gold  and returning more than 140%.

In addition, tariff concerns prompted market participants to move a lot of metal into the United States, creating liquidity squeezes in London and amplifying gains. Silver was also added to the United States’ Critical Minerals List for the first time in November 2025 because of its importance in strategic industries.

Silver was the standout metal in 2025, delivering more than 140% returns.

Platinum: A Turnaround Story

Until roughly midway through 2025, platinum traded mostly sideways, leaving it well behind the performance of other precious metals such as gold and silver. But in the months that followed, it staged a dramatic rally. Platinum had surged more than 100%, ultimately outperforming gold and making one of the strongest comebacks in the precious metals space.

Benefitting platinum was interest rate cuts and a gravitational pull away from gold. The metal’s addition to the United States’ Critical Minerals List also made it eligible for tariffs, and these concerns have been the key reason behind an increase in inventories in the United States and liquidity tightness elsewhere. 

In addition, platinum’s supply has been constrained by a low-price environment in previous years amid palladium’s woes caused by uses in auto-catalysts, which is an industry in decline. The two metals are usually produced together, and the supply-demand situation in one metal typically affects the other.

Conclusion

Industrial metals have increasingly decoupled from their cyclical stories, supporting by thematic demand trends such as the energy transition, data centers, AI, and defense. Precious metals, meanwhile, became market highlights in 2025 amid geopolitical risks, interest rate cuts, and uncertainty. 

As we move into 2026, we believe the structural story for both industrial and precious metals remains intact, providing a foundation for continued price support.

In addition, much of the world’s metal supply comes from EMs—including Chile, Peru, Mexico, China, and South Africa—while China alone has been a major demand driver, accounting for more than half of global demand. 

Understanding EMs, therefore, could be key to analyzing metals trends and identifying the investment opportunities they could potentially offer.

Alexandra Symeonidi, CFA, is a senior corporate credit and sustainability analyst on William Blair’s emerging markets debt team.