Base Metal Fundamental Outlook
Advisory Bazaar Info Services
Copper:
The macro environment remains supportive after New York Fed President John Williams expressed confidence that inflation will gradually ease, reducing concerns over prolonged high interest rates. Meanwhile, uncertainty surrounding the US-Iran negotiations and the reopening of the Strait of Hormuz continues to influence market sentiment. On the fundamentals side, the arrival of domestic and imported copper cathodes has improved supply conditions slightly, easing tightness in the spot market. However, elevated copper prices and the seasonal demand slowdown continue to weigh on downstream purchasing activity, with buyers limiting procurement to immediate requirements. According to SMM, copper inventories in major Chinese regions rose by 6,200 mt week-on-week to 118,900 mt as of August 3.
Outlook: Copper prices are expected to trade in a consolidation phase with a slight upward bias, supported by improving macro sentiment despite weak seasonal demand.
Aluminium:
Aluminium continues to benefit from easing concerns over further US Federal Reserve rate hikes and improving sentiment across the non-ferrous metals sector. Rising liquid aluminium production in China and persistent geopolitical risks in the Middle East are providing additional price support. However, increasing aluminium capacity outside China, weak domestic demand during the seasonal off-season, and lingering macro uncertainties are likely to cap further gains.
Outlook: Aluminium prices are expected to remain firm with a positive bias, although resistance at higher levels may limit further upside.
Lead:
Lead prices have declined to their lowest levels in nearly three years as weak downstream demand continues to pressure the market. Lead-acid battery manufacturers remain cautious in procurement, resulting in rising inventories at smelters. Deliveries to exchange warehouses have further increased social inventories, although expected maintenance at primary and secondary smelters could slow supply growth in the coming weeks.
Outlook: The lead market remains under bearish pressure. Supply-side tightening may offer limited support, but overall sentiment is expected to stay weak.
Zinc:
LME zinc recently climbed to a near four-year high amid tight overseas inventories before retreating sharply due to profit-taking. In China, weak seasonal demand and rising zinc ingot inventories continue to weigh on prices. Additionally, the resumption of production at several smelters in August is expected to increase refined zinc supply, adding further pressure to the domestic market.
Outlook: Zinc prices are likely to remain range-bound in the short term, with weak demand and improving supply limiting upside potential.
Tin:
Tin fundamentals remain supportive as the complete suspension of mining and beneficiation operations at Yinman Mining, coupled with the slow recovery of production in Wa State, continues to tighten global supply. Processing charges remain at historically low levels, while smelter operating rates in Yunnan and Jiangxi are subdued, indicating the possibility of further production declines in August. On the demand side, AI servers and advanced semiconductor packaging continue to provide structural support, although seasonal restocking for new consumer electronics has yet to begin.
Outlook: Tight supply conditions and expectations of stronger technology-related demand are expected to keep tin prices well supported, with prices likely to remain firm despite near-term volatility.