Commodity Market Update: Base Metals Mixed, Copper Supported by Lower Inventories

Metal Markets:

China’s base metals market remained mixed at midday. SHFE copper declined 0.17%, lead 0.09%, tin 1.19% and nickel 0.44%, while aluminium gained 0.13% and zinc rose 1.09%.

Ferrous metals mostly traded higher. Iron ore remained steady at 718.5 yuan/mt, while rebar gained 0.49% and HRC rose 0.09%. Stainless steel fell 1.58%. Coking coal and coke increased 1.52% and 0.61%, respectively.

In overseas markets, LME metals were mostly higher. LME copper rose 0.42%, aluminium 0.23%, zinc 0.75%, tin 0.21% and nickel 0.12%, while lead was unchanged at $1,905.5/mt.

Precious Metals:

COMEX gold rose 0.76% and silver gained 1.73%. SHFE gold was nearly flat, while the most-traded SHFE silver contract advanced 1.31%. Platinum and palladium declined 0.75% and 0.38%, respectively.

Copper:

Guangdong copper premiums increased by 10 yuan/mt across high-quality, standard-quality and SX-EW copper. The average price of Guangdong #1 copper cathode stood at 108,955 yuan/mt, down 125 yuan/mt from the previous trading day. Regional inventories continued to decline for the eighth consecutive day, providing support to the spot market.

Macro Outlook:

China’s industrial enterprises above designated size recorded a 17.6% YoY increase in profits during January-July 2026. Strong growth in the electronics and semiconductor sectors was a key contributor.

The PBOC injected a net 606.5 billion yuan of liquidity through reverse repo operations.

In the US, the July PCE price index rose 3.7% YoY, above market expectations, strengthening expectations of a potentially tighter Federal Reserve policy. According to FedWatch, markets are pricing a 36.5% probability of a 25-basis-point rate hike in September, while the probability of rates remaining unchanged stands at 63.5%.

Global Currencies:

The US Dollar Index was broadly stable around 99.15. The Bank of Korea raised its benchmark rate by 25 basis points to 3.00%, while the Bank of Japan signalled that timely rate hikes may be required if inflation risks increase.

Crude Oil:

Oil prices remained under pressure, with WTI down 0.55% and Brent lower by 0.59%. Shipping activity through the Strait of Hormuz improved slightly but remained below the recent average. Meanwhile, US distillate inventories fell to 103.4 million barrels, around 14% below the five-year average, supporting concerns over diesel supply.

Market View:

Base metals are likely to remain volatile amid mixed Chinese price trends, stronger US inflation expectations and changing Fed rate expectations. Falling copper inventories and firm Chinese industrial activity may provide near-term support, while a stronger dollar and higher interest-rate expectations could limit upside.