Base Metal Fundamental Outlook
Advisory Bazaar Info Services
Copper
With the US Federal Reserve meeting approaching, escalating geopolitical tensions have pushed energy prices higher, reviving inflation concerns. Risk-off sentiment and expectations of higher interest rates strengthened the US dollar, putting pressure on copper prices.
On the fundamental side, domestic copper arrivals and imported cargoes remained limited, keeping overall market supply relatively tight. Traditional peak-season demand and dip-buying at lower levels supported some recovery in downstream demand, although buying remained largely need-based.
As of September 14, SMM copper inventories across major regions in China increased by 5,200 mt WoW to 90,300 mt, but remained 63,900 mt below the 154,200 mt recorded during the same period last year.
Outlook: Copper prices are expected to remain under mild downward pressure in the near term.
Aluminium
Expectations of higher interest rates, rising US Treasury yields and a stronger US dollar are weighing on the non-ferrous metals sector. Meanwhile, uncertainty remains over the reopening of safe commercial shipping routes through the Strait of Hormuz.
Fundamentally, continued destocking in China and a recovery in peak-season demand are providing relatively strong downside support. The central bank’s 500 billion yuan six-month outright reverse repo operation has also eased concerns over domestic liquidity tightening, offering mild support to aluminium prices.
Outlook: Aluminium prices are likely to remain in high-level consolidation in the short term.
Lead
SHFE lead rebounded slightly during the overnight session but remained below the 16,000 yuan/mt level. Following the sharp decline in the previous session, the KDJ indicator has entered oversold territory, suggesting that the pace of decline may be slowing. However, the overall trend remains weak.
In the spot market, smelters continued to hold firm on prices and limited sales. Secondary refined lead shifted to premiums, while downstream buyers increased purchases at lower levels. Declines in both domestic social inventories and LME inventories are also providing downside support.
Outlook: Lead prices are expected to consolidate at relatively low levels, with the downside gradually stabilizing. Upside potential is likely to remain limited.
Zinc
LME zinc remained under pressure overnight, although support was seen around the 40-day moving average. The LME Zinc 0-3 spread recorded a backwardation of $138.72/mt, highlighting continued structural tightness, although risks remain.
A stronger US dollar, supported by safe-haven demand and expectations of higher US interest rates, continued to weigh on the broader base metals complex. SHFE zinc opened lower but found support near the lower Bollinger Band and recovered from its lows.
Tight ore supply remains a key fundamental support, with no significant improvement in availability so far.
Outlook: Zinc is expected to remain in a consolidation phase in the short term.
Tin
Demand remained polarized. Orders for high-end applications such as AI servers, advanced packaging and semiconductor-grade tin materials remained stable, while traditional solder, tinplate and tin chemicals continued to underperform despite the peak season.
After the psychological 400,000 yuan/mt level was breached, downstream restocking sentiment improved slightly, although incremental buying remained limited.
On the supply side, water-level and ore-grade issues in Myanmar’s Wa State continue to constrain the pace of production recovery following the rainy season. Indonesia’s tin ingot exports for July and August were revised higher to 4,795 mt and 4,510 mt, respectively. Exports above 4,500 mt for two consecutive months have prompted the market to reassess the likelihood of achieving the full-year production target. The exact pace will depend on the official August export data from Statistics Indonesia.
Outlook: Tin prices may find support from supply-side uncertainties, while demand remains mixed across end-use sectors.