Raw materials: European rearmament drives demand for industrial metals

European rearmament, spurred by the Russian-Ukrainian conflict and NATO commitments , which have seen military spending rise to 3% of GDP, is providing unexpected support to global demand for industrial metals . Historically, defense accounts for about 2-3% of global consumption of copper, aluminum, steel, and zinc, and 7% of nickel . However, accelerating military investment in Europe could translate into a much more significant increase, especially at the regional level. This is according to a new report from Goldman Sachs.

Military spending in the Eurozone is set to accelerate

Economists at the American investment bank estimate that Eurozone military spending will rise from 1.9% of GDP in 2024 to 2.7% in 2027. A significant portion of this increase—up to 40%—will be allocated to metal-intensive equipment . In concrete terms, this would translate into a 6% increase in European demand for industrial metals and a contribution to global demand of 0.4% for steel, 0.9% for copper, and 1.3% for nickel.

Copper demand and prices expected to rise

This trend is particularly relevant for copper , considered crucial to the energy transition and digital infrastructure. Increased defense-related demand—estimated at 284,000 tonnes by 2027 —could raise the annual growth rate of global demand from 2% to 2.4% , with bullish effects on prices. Goldman Sachs forecasts a target of between $10,000 and $10,750 per tonne for the two-year period 2026-2027, while warning that rising refined inventories could mitigate upward pressure.

A new potentially bullish scenario

Looking ahead, European military spending will not only triple the defense sector's metal consumption (from $3 billion to $9 billion, at 2024 prices), but will also contribute to strengthening existing trends : from military digitalization , which is driving demand for copper in data centers, to the strengthening of electricity grids and critical infrastructure. In this context, defense, artificial intelligence, and network renewal represent the three main upside factors for the industrial metals market, reshaping the balance of global demand.