Copper Joins the Battlefield as Europe Boosts Military Budgets
Copper, nickel, and steel are set to join defense stocks as winners of Europe’s rearmament push, with Goldman Sachs projecting a structural surge in industrial metals demand.
Europe’s renewed commitment to defense has transformed markets in 2025. Defense stocks are soaring, with the MSCI Europe Aerospace and Defense Index climbing an astonishing 72 percent this year alone. Yet, as investors celebrate the boom in military contractors and weapons makers, a deeper story is unfolding—one that stretches far beyond the battlefield. Industrial metals, from copper to nickel and steel, are set to become the unexpected beneficiaries of Europe’s military build-up.
The Metals Behind the Military
When governments boost defense budgets, it isn’t just aircraft, tanks, or ships that see demand. At the core of these machines lies a foundation of metals. Copper wires power communications and radar systems, nickel fortifies armored vehicles, and steel frames every piece of heavy weaponry. According to Goldman Sachs, the defense sector already accounts for roughly 3 percent of global demand for industrial metals, ranging from 2 percent of steel demand to a hefty 7 percent of nickel demand. Europe’s rearmament could push these figures sharply higher.
The EU has been under mounting pressure, both from Washington and from the shifting geopolitical realities brought on by the war in Ukraine, to ramp up military spending. In 2024, euro-area defense expenditures hovered around 1.9 percent of GDP. By 2027, Goldman expects that figure to rise to 2.7 percent. That represents an extra €167 billion, or about $196 billion, annually. Crucially, nearly 40 percent of this increase is expected to flow into procurement—the most metals-intensive category of spending—doubling NATO’s historic 20 percent benchmark.
Among all metals, copper stands out. The red metal is a backbone of modern defense technology. From missile guidance systems to naval ships, from aircraft wiring to communications infrastructure, copper is everywhere. Goldman estimates Europe’s military build-up will lift global copper demand by nearly 1 percent by 2027, enough to shift global supply-demand balances. What makes copper even more strategic is that it straddles two booming sectors: defense and artificial intelligence. The same wiring that powers tanks also drives AI data centers, creating a double surge in demand.
Copper futures currently hover near $9,797 per ton on the London Metal Exchange, but Goldman sees upside risks. Their forecasts peg copper at $10,000 per ton in 2026 and $10,750 in 2027. While high inventories could dampen near-term price spikes, the long-term trajectory is clear: the world is entering a copper-constrained era, driven not only by the green transition but now by rearmament and digital infrastructure. Nickel and steel too are poised for stronger demand, with nickel particularly exposed to Europe’s defense pivot.
The rally in defense equities is headline-grabbing, but the metals market may tell the more consequential story. The EU’s defense acceleration is not a short-term policy swing, it is a structural shift. For decades, Europe has underinvested in defense relative to NATO targets. Now, faced with the stark realities of modern geopolitics, that posture has changed. The capital flowing into rearmament will create a lasting pull on industrial resources. Investors who focus solely on defense stocks risk missing the broader commodity supercycle that could follow.
Conclusion
Europe’s spending blitz is rewriting investment narratives. Defense stocks are the first beneficiaries, but they are far from the only ones. Industrial metals—copper above all—are moving from overlooked sectors into the center of the rearmament story. As defense budgets swell, so too does demand for the metals that make modern militaries possible. The world is learning once again that wars aren’t just fought with strategy and soldiers—they are built on steel, wired with copper, and reinforced with nickel.