The European rearmament, stimulated by the Russian-Ukrainian conflict and the commitments made in the NATO, which see a growth of military spending up to 3% of GDP, is guaranteeing unexpected support for the global demand for industrial metals. Historically, the defense affects about 2-3% on the world consumption of copper, aluminum, steel and zinc, and for 7% on those of Nickel. However, the acceleration of military investments in Europe could translate into a much more significant increase, especially at regional level. This is what emerges from a new Goldman Sachs report.
Military spending in the Eurozone is destined to accelerate
The economists of the American business bank estimate that the military expenditure of the Eurozone will go from 1.9% of GDP in 2024 to 2.7% in 2027. A substantial part of this increase – up to 40% – will be intended for high intensity equipment of metals. In concrete terms, this would translate into a 6% growth in the European demand for industrial metals and in a contribution to global demand equal to 0.4% for steel, 0.9% for copper and 1.3% for nickel.
Including rame that has been expected to grow in growth
This dynamic takes on particular relevance for copper, considered crucial in the energy transition and digital infrastructures. The increase in the demand related to defense – estimated at 284 thousand tons by 2027 – could raise the annual growth rate of global needs from 2% to 2.4%, with upward effects on prices. Goldman Sachs includes a target between $ 10,000 and $ 10,750 per ton in the two-year period 2026-2027, while warning that the increase in refined stocks could mitigate the pressure up to the rise.
A new potentially bullish scenario
In perspective, European military spending will not only triple the consumption of metals by the defense sector (from 3 to 9 billion dollars, at prices 2024), but will also contribute to strengthening trends already in place: from military digitization, which favors the demand for copper in data centers, up to the enhancement of electrical networks and critical infrastructures. In this context, defense, artificial intelligence and renewal of the network represent the three main Upside factors for the industrial metal market, redesigning the balance of global demand
