Portugal & Spain

The Iberian metals market is facing severe shortages, driven by falling LME prices, supplier stockpiling and ongoing disruption as a result of several recent holidays. Supply has been tight and foundry prices in Spain are high for immediate delivery.

Demand may be slowing but the picture remains mixed. Exchange rate shifts had limited the impact on suppliers who traditionally export significant volumes. Tensions with the USA remain a concern, but no major effects have been seen as yet. Meanwhile, the export ban on e-motors has made local competition stronger, favouring domestic players.

Primary aluminium prices continue to decline, with spot contracts under pressure. The recent holiday season has added to market disruption without significantly moving prices.

Portugal’s economic outlook remains positive, with recent forecasts projecting GDP growth of around 2.3% for this year and thus continuing to outpace the Eurozone average. This growth appears increasingly driven by strong public investment, bolstered by EU funds, and recovering business investment, indicating a shift away from primarily consumption-led expansion. While consumer spending might see some moderation, overall economic momentum is expected to be maintained.

The labour market is showing resilience, with unemployment stabilising around 6.4-6.5% and job growth projected to continue at a moderate pace. Inflationary pressures have subsided, with the annual rate falling to 1.9% in March and forecasts suggesting an average rate of around 2.3% for the year. Overall, Portugal continues to display economic resilience, marked by steady growth, controlled inflation and strengthening public finances.

In Spain too, the economy has continued to show notable resilience in early 2025 and is also significantly ahead of the Eurozone average, with updated growth forecasts for the year clustering between 2.5% and 2.8%. This robust performance is fuelled primarily by strong domestic demand supported by gains in real income and ongoing job creation, alongside a thriving services sector, especially tourism.

The labour market, however, presents a mixed picture; despite continued employment growth, the unemployment rate increased in the first quarter of 2025 to 11.36% to remain the highest within the EU. On a brighter note, inflation has continued to moderate, with the preliminary annual rate easing further to 2.2% in April 2025 and approaching the European Central Bank’s target. Overall, Spain is maintaining a solid economic outlook for 2025 driven by domestic strengths, although the recent labour market figures and manufacturing slowdown warrant attention.