Base Metal Fundamental

Advisory Bazaar Info Services

Copper –

From a macro perspective, the US July CPI (YoY) stayed flat at 2.7%, while core CPI hit a five-month high of 3.1%. Following the release, expectations of a Fed interest rate cut in September increased. Trump urged Powell to cut rates immediately, while US Treasury Secretary Besant suggested considering a 50-bps cut. The US Dollar Index weakened, providing support to copper prices. On the supply side, domestic availability remained tight as smelters were reluctant to sell, constraining the spot market. On the demand side, copper prices dipped slightly during the day, with downstream buyers maintaining just-in-time procurement. The latest US inflation data reinforced expectations for a Fed rate cut, keeping copper supported at the lower end today.

Aluminum –

Macro-wise, the July US CPI data and subsequent rate-cut expectations led to US dollar weakness, giving aluminum prices an upward push. Fundamentally, supply saw only a slight increase as primary aluminum production stayed stable. The industry’s weekly average cost was 16,738 yuan/mt, with high profitability persisting. On the demand side, the off-season is weighing on consumption — growth in home appliances and PV sectors has slowed, export orders have declined, and the construction sector continues its super-seasonal downturn. Social inventory of aluminum has exceeded 550,000 mt. High prices during the off-season could further dampen demand, with short-term inventory buildup likely to continue. While current highs may be sustained for now, the 21,000 yuan/mt mark remains under pressure.

Lead –

Lead prices strengthened on positive macro sentiment and solid cost support. Shipping interest for secondary refined lead improved, though smelters continued quoting at premiums. Some suppliers offered slight discounts for self-pickup at production sites. The supply situation in Hebei later in August warrants attention. The downstream lead-acid battery sector’s peak season is slow to emerge, with most buyers sticking to just-in-time purchases. As the SHFE lead 2508 contract approaches delivery, traders are not inclined to widen discounts, and prices may hold firm in the near term.

Zinc –

Overnight, LME zinc posted gains, supported by the 20-day moving average. The mild rise in July US CPI bolstered rate-cut expectations, while a weaker US dollar and the 90-day delay in imposing 24% tariffs between China and the US improved market sentiment. However, domestic zinc ingot inventories kept building. Strong production enthusiasm from smelters, coupled with weak demand, limited SHFE zinc’s upward momentum.

Tin –

Supply: Tin ore supply is tightening in major production hubs like Yunnan, with some smelters potentially maintaining maintenance shutdowns or making small production cuts in August (Bullish★).

Demand:

• PV sector: After the installation rush, tin bar orders declined in East China, lowering operating rates at some producers.

• Electronics: South China’s electronics sector entered the off-season; high tin prices kept end-users in a wait-and-see mode, placing only essential orders.

• Other sectors: Stable demand in tinplate and chemicals, but without exceeding expectations.