Base Metal Fundamental Outlook
Advisory Bazaar Info Services
Copper
On the macro front, US July nonfarm payrolls unexpectedly declined by 23,000, while the unemployment rate fell to 4.1%, indicating mixed signals from the labor market. Trump has initiated the process of removing Fed Governor Cook and stated that interest rates are not determined solely by Warsh.
Geopolitical uncertainty also remains elevated. Trump postponed military action against Iran, while Iran stated that the Strait of Hormuz remains closed. The weaker payroll data pressured the US dollar, while concerns over Fed independence and Middle East uncertainties triggered a sharp move higher in copper, followed by some profit-taking.
Fundamentally, available copper supply has not loosened significantly. However, with delivery approaching, rollover demand is expected to increase and may bring more low-priced cargoes into circulation. Overall supply remains relatively tight.
On the demand side, high copper prices and seasonal weakness are keeping downstream buyers cautious, with most purchases limited to immediate requirements.
Outlook: Copper prices are expected to trade with a mildly firm bias today.
Aluminium
Uncertainty surrounding the Middle East situation remains. Although the US Federal Reserve did not raise interest rates in July, its overall stance remains hawkish.
Fundamentally, the supply-demand gap continues, while aluminium ingot inventories are consistently declining, providing support to prices.
Outlook: Aluminium prices are expected to consolidate with a firm undertone in the short term.
Lead
The recent buildup in social lead inventories is considered normal ahead of SHFE lead delivery. As delivery approaches this week, suppliers are expected to move more material into delivery warehouses, which could further increase visible inventories and put some short-term pressure on prices.
However, maintenance at major primary lead smelters supplying delivery brands is gradually beginning. This could become an important supportive factor for lead prices from mid-to-late August.
Outlook: Lead prices are expected to consolidate with a subdued bias in the short term.
Zinc
LME zinc formed a large bearish candlestick last Friday. Easing geopolitical tensions and unexpectedly weak US nonfarm payrolls reduced expectations of a near-term Fed rate hike, improving overall macro sentiment.
However, LME inventories remain at low levels. Profit-taking and fund exits pushed zinc prices lower.
LME Outlook: Zinc is expected to consolidate at higher levels today.
SHFE zinc also formed a small bearish candlestick last Friday. Influenced by the LME market, the SHFE zinc price center moved lower, while Chinese consumption remained weak. However, low zinc concentrate treatment charges (TCs) continue to provide fundamental support.
SHFE Outlook: SHFE zinc is expected to consolidate at higher levels today.
Tin
Tin fundamentals remain tight, with supply elasticity still severely constrained. Yinman Mining remains fully suspended, while production in Wa State continues to be capped at around 50% of pre-ban levels.
1. Yinman Mining:
Yinman Mining’s mining, beneficiation and tailings systems remain fully shut down, with the duration of the suspension still uncertain. Xingye Silver&Tin announced on July 30 that both its mining and beneficiation/tailings systems had been halted.
The surface stockpile buffer of around 350,000 tonnes of ore is currently ineffective. With annual mining and beneficiation capacity of approximately 1.65 million tonnes, a 1–2 month shutdown could result in an estimated loss of around 1,000 tonnes of tin metal. This represents approximately 3%–4% of domestic tin concentrate supply, indicating regional marginal tightening rather than a nationwide supply disruption.
2. Wa State:
The rainy season is gradually winding down in August, allowing some improvement in mine drainage and transportation. However, full-year production recovery remains capped at around 40%–50% of pre-ban levels, while a full recovery is unlikely before 2027.
3. Smelting & Demand:
Domestic refined tin production stood at 15,430 tonnes in June, up 1.71% month-on-month and 11.73% year-on-year. Yunnan’s refined tin operating rate was around 80%, while Jiangxi’s remained relatively low at 32%–35%.
Treatment charges for 40% tin concentrate remained around RMB 17,500–18,000/tonne, still at historically low levels. The transmission chain remains intact: tight ore supply → weaker smelting → limited refined tin growth.
Outlook: Tin fundamentals remain supportive, with tight raw-material supply expected to provide continued support to prices.