Why Metal Stocks Are Shining Again?

Metal stocks are back in favor. After struggling through much of 2024 amid sluggish demand and falling prices, the sector has turned sharply higher in 2025. Shares of leading producers such as Freeport-McMoRan (NYSE:FCX), Cleveland-Cliffs (NYSE:CLF), and ArcelorMittal (NYSE:MT) have rallied as global growth shows renewed momentum, commodity prices strengthen, and investors rotate back into cyclicals. Our dashboard Compare S&P 500 Materials Stocks Performance captures how materials stocks have performed.

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Global Demand Is Rebounding

The upturn began with signs of life across major economies. Manufacturing activity in the U.S., India, and parts of Europe has accelerated, while China’s renewed focus on housing completions and infrastructure has boosted steel and copper consumption. Purchasing Managers’ Index (PMI) readings across the industrial world are back in expansion mode, signaling that demand for raw materials is picking up after a year of contraction.

Resilient demand is one of the factors we take into account in our High-Quality portfolio, which has outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Metal Prices Are Surging

Commodity prices have reflected that shift. Copper has climbed past $5 per pound, aluminum is up over 20% this year, and steel prices have rebounded from 2024 lows. These gains have translated directly into stronger profitability for miners and steelmakers, many of whom are reporting improved cash flows and using the recovery to cut debt or return capital to shareholders. Tight inventories and supply disruptions have only added fuel to the rally.

Structural Tailwinds Add Support

Beyond the cyclical upswing, structural factors are also lifting the outlook. The global energy transition — from electric vehicles to power grid upgrades and renewable installations — continues to drive sustained demand for metals such as copper, nickel, and aluminum. At the same time, years of under-investment in new mining projects have left supply growth constrained. With ore grades declining and permitting delays mounting, the balance of power has shifted toward producers.

Investor Rotation Into Cyclicals

The shift in sentiment extends beyond the commodities market. With inflation easing and interest rates likely to decline, investors are rotating from defensive sectors into economically sensitive areas like metals and mining. Exchange-traded funds tracking the sector have seen strong inflows, and valuations for many large-cap metal producers remain below long-term averages, suggesting more room for upside if earnings continue to recover.

The Bottom Line

The rally in metal stocks isn’t just about a short-term rebound in prices — it’s about a broader recognition that metals are critical to the next phase of global growth. Whether it’s rebuilding infrastructure, electrifying transport, or modernizing power systems, metals are at the center of it all. For investors, the recent strength across names like FCX, CLF, and MT underscores one message: the metal cycle may be turning for the better, and this time, it could last longer than expected.

Fundamentals take a back seat when investors get spooked by the outlook, and even great stocks can take a beating. To reduce stock specific risk while getting exposure to upside, consider taking a look at the High Quality portfolio, which has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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