The devil takes the first and the last

Short-term control instead of long-term planning
At the moment very large organisations and corporations in particular are having problems in the very volatile and non-transparent economic environment to switch from long-term, stable planning and methods to agile, dynamic business management, basically on demand. Sectors and companies that are already confronted with high volatility and strong external influences in their business models are understandably finding it currently easier to come to terms with the many “grey swans”.

The current situation and outlook for the global economy remain unclear, even though on balance there appears to be a slight upward trend, especially in terms of expectations. However, there is a lack of clear signals and data. It is, however, made difficult by the US not currently publishing any public economic data, as most authorities, including the statistics office, remain closed due to the budget shutdown. Although the record-breaking shutdown now appears to have been settled, the existing problems in the US and its high level of debt remain. The same applies to the numerous military and commercial conflicts.

At the moment, the focus of analysts and media is either to the north or the south, then again to the west or the east, depending on events, and then this is repeated once more. It is becoming increasingly difficult to maintain an overview, even with the glut of news that is almost impossible to verify. The hope is that in the future AI (artificial intelligence) will provide clarity, but even this seemingly unstoppable driver of the financial markets and economy, especially in the US, is showing cracks, but more on that soon.

If the reports are right, even Donald Trump is facing stronger and, above all, more open criticism at the moment, even from within his own ranks. And even the highest court in the United States, the Supreme Court, has recently given the impression that the tariffs imposed by the US government by executive order, under the general facade of protecting national security, may require the approval of parliamentary law-makers and would therefore be invalid for the time being.

This is noteworthy since the court has already been filled with Republican votes in the past in order to avoid major shipwrecks in government action. And now a surprise may be coming that could even exceed by far the sinking of the Titanic. Chaotic times could follow. Transparency will therefore continue to be lacking well into the coming year, but given the multitude of actual and perceived problems and challenges, things are still going almost well.

As far as the nickel market on the London Metal Exchange (LME) is concerned, it could be said it is business as usual. At least this can be said in regard to the price development of primary nickel (grade 1). USD 15,000.00 per tonne nickel seems to be a strong support level, which is probably due to the fact that even nickel pig iron (NPI), dominant in the physical market in China and Indonesia, at this level does not bring much joy and profit to producers there. But there are also no reasons to fantasise about price jumps. Battery production especially is significantly weaker and slower than expected and also in the meantime there are chemical alternatives, depending on application, to batteries with high nickel content, which is also slowing demand. At editorial deadline, the three months future was trading at USD 15,050.00/mt.

AI between euphoria and pragmatism: the logic of the second movers
It is not difficult to find articles which praise AI and its potential beyond all measures. This applies in particular if the input is made by stakeholders in the AI sector or there has been lobbying influence. And even the mainstream seems to be here a fairly uncritical companion, not to say admirer, of this new technology. Amazement, coupled with enthusiasm and even euphoria, is understandable after initial practical experiments with chatbots such as Chat GPT or Gemini, Google’s AI assistant. And it is precisely those who are not so IT-knowledgeable, sometimes referred to as the “old white men” group, who show particular enthusiasm, even if they may not fully understand how things work.

Indeed, it is not easy to maintain a perspective or form an objective opinion as the technology is so complex and potentially disruptive. Therefore, alternative viewpoints, facts and data are presented below to provide greater transparency on this trending topic.

A growing part of the public discussion about artificial intelligence is getting a noticeably threatening undercurrent. What was initially celebrated as a promising future technology is not being increasingly warned about. Politicians and business leaders are urging with almost missionary zeal that now is the time to act in order not to become “left behind”. Recently for example, the British Technology Minister, Peter Kyle, explained: “Act now, and you will thrive into the future. Don’t, and some people will be left behind.” Also, software companies, such as Salesforce and platforms like Fiverr are using this rhetoric: Who doesn’t use AI is “doomed”. Fiverr Head Micha Kaufman even internally formulated it as: “AI is coming for your jobs. Are we all doomed? Not all of us, but those who don’t wake up fast, are doomed.”

But is this “now or never” drama really without alternative? The Financial Times contradicts: There is still something else between first movers and left behinds – the second mover advantage. In many branches it wasn’t the early pioneer who was the long term winner, but the late-comer, who had learnt from the mistakes of others. Facebook took over MySpace, Google pushed out Ask Jeeves. Especially in cases of indistinct cost-benefit profile the second move can be even cleverer: Bad investments can be saved, dependence on immature providers can be avoided and then more robust procedures can be developed.

This caution seems particularly appropriate in today’s world still inexperienced with so-called agentic AI systems – that is, independently acting, learning software agents. A recent McKinsey report, which the Financial Times refers to, points out a whole row of risks: “uncontrolled autonomy, fragmented system access, lack of observability and traceability, expanding surface of attack, and agent sprawl and duplication”. In other words: the systems are difficult to monitor, create new security flaws and threaten to grow uncontrolled. In such an environment waiting can not only be economically sensible, but also quite simply could minimise risk.

The warning of “act now” rhetoric brings memories of sales psychology – fear and scarcity signals are used by online traders (“only available today!”) – and hits the button. It is less about strategy than marketing. Such artificially created urgency activates the fear system of the brain, shown by neuroscientists – this reduces creativity, courage for innovation and risk acceptance. Therefore a contradiction: putting pressure on employees destroys exactly that openness which would be necessary for a meaningful AI integration.

At the same time, the US economy is experiencing an investment wave of historic proportions. According to Macquarie Economics, the AI expansion in the first half of 2025 amounted to one percent point of the US GDP – around two thirds of the total growth. The ten biggest technology companies (including Google, Amazon, Microsoft, Apple and Nvidia) invested in the second quarter 426 billion US-dollar on an annual basis – an increase of 73% over twelve months. This makes the share of technology based investments in US economic output in the meantime higher than at the peak of the dotcom bubble at the turn of the millennium.

Yet, despite these amounts, the productivity gains which had been hoped for are yet to materialise. The overall labour productivity in the USA continues to remain in the trend of recent decades. An MIT study revealed that 95% of AI pilot projects have not yet produced a measureable added value. At the same time the thirst for energy is climbing dramatically: data centres need nowadays about 4.5% of the total US electricity consumption – the trend climbing, with regional shortages in states such as Virginia and North Dakota.

Macquarie draws parallels with the 1990’s. At that time the hope for digital efficiency also pushed a massive influx of capital into technology stock. Today market capitalisation of the big US tech companies is almost 10 trillion (not billion!) dollars more than before the introduction of ChatGPT – a third of the total US GDP. Yet, while the turnover of these companies “only” rose by 15 %, the investment quota grew by 18 % of the turnover. High costs, short innovation cycles and rapid depreciation increase the risk that many will never see any return on these investments.

The lesson from the past and present is therefore clear: technology can create prosperity, but it does not guarantee it. The broad productivity gains of a new era are often only seen years after the hype – and usually not with the pioneers, but in the economy which comes later. The supposedly “ones left behind” can be revealed at the end as the winners. In this respect, the much-maligned second mover could prove to be the true realist of this AI era – and not the loser that tech prophets would currently want to be believed. Of course, these statements do not claim to be universally right, but are intended to give food for thought.

China tightens export controls on metals – West responds by establishing its own supply chains
China has once more announced comprehensive export restrictions on metals and minerals, which are immensely important for energy transition in such as defence and the electronics industry. Beijing is increasing its control over rare earths by five additional elements and therefore strengthens its already strict monitoring in the export of these critical raw materials. The decision caused unrest amongst western industrial nations, since many companies continue to be strongly reliant on China’s dominance in metal processing.

About 90 % of refined rare earths, over 90 % of graphite, almost 80 % of cobalt and around 70 % of lithium are currently from Chinese production. If the Chinese controlled refineries in Indonesia are also included, then China’s share of refined nickel is also at about 70 %. The west is only less dependent with copper, where the share is just under 50 %.

In the short-term new export restrictions could cause massive disruptions in the western supply chain. Yet, in the long-term, China is threatening to endanger its own industry. For, the more that Beijing uses its raw material power as a political lever, the stronger the incentive is for western countries to build alternate supply chains and increase refinery capacities. The necessary raw materials are available in many other places – the processing is decisive.

At this year’s LME Week in London, the Trafigura CEO Richard Holtum emphasised: “You do not have national security if you just have stuff in the ground.” His statement underlines the new strategic course of western governments, which are increasingly more willing to invest billions in expanding their own metal processing facilities and providing subsidies for domestic refineries – even if these cannot compete with Chinese prices at the moment.

This indicates a split into two for the global metals market: a more expensive but more secure supply system for western consumers on the one hand – and a more cost-effective and more politically controlled system in China on the other. In the short term, uncertainty increases in the commodity markets, but in the long term it could reduce global dependence on the Chinese refining sector.

Commodities on the verge of the next supercycle? Structural shortages and new demand drivers point to a long-term upturn
Investor and author Taosha Wang, in an opinion piece published by Reuters, shared her thoughts in regard to the future prospects of commodities. After more than a decade of weak development, the global commodity markets are on the verge of a new supercycle. Historically, such phases are triggered by hefty economic and geopolitical changes – such as by the energy crisis of the 1970’s or China’s urbanisation boom at the start of the new millennium. Today, according to Taosha Wang, numerous structural trends suggest that once more the conditions for a long-term commodity upswing are forming.

A central feature of the present situation is the high geographical concentration of raw material mining, as mentioned in the previous section. According to S&P Global, over 40 % of global copper production originates from Chile and Peru, more than 50 % of iron ore from Australia and Brazil and about 40 % of uranium from Kazakhstan. This dependence also affects processing: China controls almost 90 % of the global refinery of rare earths – essential for electric vehicles, wind turbines and the defence industry – and in addition processes almost 50 % of global copper.

This concentration creates geopolitical risks. In this year already China restricted the export of rare earths, as mentioned earlier, in retaliation to the trade war with the United States of America, while the USA for its part anchored long-term LNG purchases in trade agreements with the EU and South Korea. Such developments show that raw materials are increasingly being used as political levers – which could indicate a risk surcharge on prices and the supply chain in the long-term.

In addition, many easily accessible deposits are already exhausted. New projects suffer from lower ore content, exploding costs and lengthy approval procedures. Years of underinvestment – intensified by shareholders demands for dividends instead of expansion – has additionally weakened production capacities.

On the consumption side, several powerful trends can also be observed. Global electrification and decarbonisation are very metal intensive. Copper is at the centre of this. As well as construction and infrastructure electromobility, renewable energies and power grids are now driving consumption. According to the International Energy Agency (IEA) there is the threat of a supply shortage of about 30 % by 2035.

Technology changes are also increasing demand: Big technology companies are investing hundreds of billions of dollars in AI data centres and energy projects. Access to electricity and materials will become a strategic survival factor – their raw material demand is considered to be more crisis resistant.

Despite these factors many commodities are trading well below previous highs, when inflation adjustment is taken into account. Copper is about 30 % below its record of 2011, oil and the Bloomberg Commodity Index are even about 70 % below the top values of 2008. On the other hand, US equities – measured on the S&P 500 – have risen almost threefold since 2007.

At the same time, government bonds are losing their traditional function as a hedge against equity risk because of persistent inflation. Gold has already once more established itself as a safe haven; in the future industrial metals and other commodities could also once more gain importance as strategic instruments to protect against inflation and to secure returns.

Many institutional investors are still hesitant to allow direct commodity mandates – characterised by weak price trends of the last decade. However, when weaknesses in supply, geopolitical tensions and structurally rising demand coincide, then exactly the pattern could be formed which characterised previous supercycles.

Should these trends continue, then the world could possibly be at the start of a new long-lasting commodity boom. Recycling commodities should not be excluded as they still offer the same metallic content, and in terms of product quality, when processed professionally, are not any different from using primary raw materials, which, moreover, generally have a significant disadvantage in terms of carbon footprint.