Base Metal Fundamental Outlook

Advisory Bazaar Info Services

🔶 Copper

On the macro front, the US Treasury announced a long-term bond buyback operation of up to $6 billion on Thursday. US Treasury yields moved higher, while the US Dollar Index weakened, providing support to copper prices. The market remains cautious ahead of this week’s US inflation data, which could influence expectations for the US Federal Reserve’s monetary policy.

On the fundamental side, supply conditions remain regionally divergent, with limited replenishment of spot cargoes and tight market circulation. However, elevated copper prices continue to weigh on end-user consumption, keeping buyers cautious.

Outlook: Copper prices are expected to consolidate at strong levels today.

🔶 Aluminum

Better-than-expected US non-farm payroll data has increased expectations of a more hawkish US Federal Reserve stance, creating periodic pressure on aluminum prices.

Domestically, low aluminum ingot inventories and continued destocking are providing strong support to prices. The traditional September peak season has improved operating rates at processing companies, although a full recovery in end-user orders will take time and actual peak-season demand remains to be seen.

Meanwhile, aluminum billet inventories continue to rise, creating a potential risk of pressure spreading to the ingot market. Overseas aluminum supply outside China is also recovering, which could limit further upside.

From a futures perspective, SHFE aluminum remains technically strong, but upward momentum is weakening at the margin. Limited trading volume could restrict the strength of any upside breakout, while SHFE and LME trends remain divergent.

Outlook: Aluminum prices are expected to consolidate at strong levels in the short term.

🔶 Lead

SHFE and LME lead witnessed a mild correction overnight. SHFE lead retreated toward the 16,000 level during the night session as open interest increased, while momentum for chasing higher prices weakened.

In the spot market, tight primary lead supply and firm offers from suppliers are limiting downside potential. However, widening discounts for secondary refined lead, cautious downstream buying after recent low-price restocking, and weaker spot transactions indicate limited support for a sustained rebound.

Outlook: Lead prices may face mild pressure at higher levels and continue to consolidate. Market participants should monitor SHFE-LME price movements, the SHFE 16,000 level, and follow-through in spot transactions.

🔶 Zinc

LME zinc posted a strong bullish move overnight. Rising energy prices have strengthened inflation expectations, while the US Dollar Index continued to weaken. Broad gains across non-ferrous metals and relatively concentrated capital positioning on LME have pushed the price center of zinc higher.

Outlook: LME zinc is expected to fluctuate at elevated levels today.

SHFE zinc also posted a modest bullish move overnight. A weaker US dollar, broad strength across non-ferrous metals, and tight supply conditions continued to support prices, with LME gains providing additional momentum.

Outlook: SHFE zinc is expected to consolidate at higher levels today.

🔶 Tin

The most-traded SHFE tin contract is expected to trade in the ¥420,000–¥427,000 per tonne range today. If long positions continue to recover, prices could test ¥428,000.

Ahead of the September 11 CPI release, market participants are likely to remain cautious and maintain a wait-and-see approach.

Outlook: Range-bound trading is preferred, with the ¥420,000 support level remaining important.