Base Metal Fundamental Outlook

Advisory Bazaar Info Services

Copper

US ADP employment increased by only 44,000 in July, well below market expectations, indicating a cooling labour market and easing concerns over further interest rate hikes. Despite hawkish comments from Federal Reserve officials Neel Kashkari and Lisa Cook, copper prices remained supported.

Geopolitical developments also remained in focus. Former US President Donald Trump stated that a US-Iran agreement could be reached within 48 hours. Iran and Oman are reportedly close to an arrangement on the Strait of Hormuz, although any reopening of the strategic waterway remains conditional, keeping geopolitical risks elevated.

On the fundamentals side, domestic and imported copper cathode arrivals have improved, while higher prices have encouraged suppliers to increase spot sales, easing supply tightness. However, demand remains weak during the seasonal off-season, with downstream consumers purchasing only to meet immediate requirements.

Outlook: Copper prices are expected to trade with a positive bias today.

Aluminum

The macroeconomic environment has improved following the US Federal Reserve’s decision to keep interest rates unchanged, providing support to the non-ferrous metals sector.

In China, a higher proportion of liquid aluminum production and continued destocking of domestic inventories have supported prices. However, the gradual addition of overseas aluminum production capacity, weak seasonal demand in China, and easing geopolitical tensions in the Middle East are likely to cap further gains.

Outlook: Aluminum prices are expected to consolidate with a firm tone.

Lead

On the supply side, additional maintenance at primary lead smelters in August is expected to reduce output. Secondary lead production may also decline, although higher lead prices could encourage some smelters to resume operations earlier than anticipated.

Lead ingot inventories remain elevated, increasing the risk of price corrections ahead of warehouse deliveries. Demand remains mixed, with conservative buying from the e-bike sector, stable replacement demand during July and August, stronger export-oriented automotive demand, and relatively weaker domestic consumption.

Outlook: Lead prices may continue their short-term recovery, but further upside will depend on a sustained improvement in demand.

Zinc

LME zinc gained after weaker-than-expected US ADP employment data weighed on the US dollar. Falling LME zinc inventories, a persistent Cash-3M backwardation structure, and short covering further strengthened market sentiment.

In China, recurring disruptions in zinc concentrate supply continue to support expectations of a tighter raw material market, while fresh buying has kept SHFE zinc prices elevated.

Outlook: Zinc is expected to remain firm in the near term.

Tin

Tin fundamentals remain strongly supported by persistent supply constraints. Yinman Mining remains fully suspended, with mining, beneficiation, and tailings operations still halted. The prolonged shutdown is expected to tighten tin supply further if production does not resume soon.

Meanwhile, Wa State continues to operate under a 50% production cap during the rainy season. Although mining and transportation conditions have improved slightly, full production recovery is not expected before 2027. Tin ore exports to China remain subdued, keeping supply tight.

Outlook: Ongoing supply disruptions are expected to keep tin prices well supported.

Overall Market View

Base metals continue to receive support from softer US economic data and ongoing supply-side constraints. Copper, zinc, and tin are expected to remain firm, aluminum is likely to consolidate with a positive bias, while lead’s recovery will largely depend on demand conditions.