Base Metal Fundamental Outlook

Advisory Bazaar Info Services

Copper

Copper is expected to maintain a sideways-to-firm trend today. Fed rate-hike expectations have eased, while the broader Fed stance remains hawkish. Geopolitical tensions around the Strait of Hormuz and increased US military deployments in the Middle East are supporting copper prices at higher levels.

On the fundamental front, overall supply remains adequate, although high-quality and SX-EW copper availability is relatively tight. Downstream demand remains cautious at elevated price levels, with purchases largely driven by rigid requirements.

According to SMM, copper inventories in major Chinese regions fell by 2,500 tonnes WoW to 116,700 tonnes as of August 13. Total inventories were also 8,900 tonnes below the level recorded during the same period last year.

Outlook: Copper may remain sideways to firm, with support at lower levels.

Aluminum

US July PPI and core PPI declined YoY and came in below market expectations, easing concerns over inflation and reducing expectations of a September Fed rate hike.

Chinese aluminum inventories continue to destock, although the pace may slow during the second half of August. Meanwhile, the faster-than-expected resumption of production at Middle Eastern aluminum smelters is reducing concerns over supply tightness.

Outlook: Aluminum may remain under pressure at higher levels, with production recovery limiting the upside.

Lead

Lead inventories are rising as suppliers accelerate deliveries ahead of the approaching delivery period. High lead prices are also making downstream buyers cautious, reducing purchasing interest.

However, increased maintenance at primary lead smelters during mid-to-late August could tighten supply. At the same time, improving lead prices are reducing losses at secondary lead producers, increasing the possibility of production restarts.

Outlook: Lead may trade sideways with limited support, as supply-side tightening is partly offset by the potential recovery in secondary lead production.

Zinc

LME zinc formed a doji overnight as weaker-than-expected US PPI data reduced inflation and rate-hike expectations, while US-Iran tensions added uncertainty.

Continued LME destocking, relatively high capital concentration and tight ore supply are supporting zinc prices. Domestic destocking and export expectations are also providing support to SHFE zinc.

Outlook: LME and SHFE zinc may consolidate at higher levels today.

Tin

Tin fundamentals remain strongly supportive due to persistent supply constraints.

Yinman Mining has suspended its mining, processing and tailings operations, with the duration of the shutdown still uncertain. A 1–2 month suspension could materially reduce China’s domestic tin concentrate supply, while a prolonged shutdown into Q4 could further widen the supply deficit.

Meanwhile, the Wa State 50% production cap remains in place, with full production recovery postponed until 2027. Myanmar’s July tin ore exports to China recovered above 6,000 tonnes, but remain only around 40–50% of normal levels.

Outlook: Tin continues to have strong fundamental support, with supply constraints likely to keep the underlying trend firm.

Overall Base Metal Outlook

Copper: Sideways to Firm

Aluminum: Pressure at Higher Levels

Lead: Sideways / Limited Support

Zinc: Consolidation at Higher Levels

Tin: Firm / Strong Fundamental Support