Base Metal Fundamental Outlook

Advisory Bazaar Info Services

🔹 Copper:

Weak US retail sales and a decline in consumer confidence put pressure on the US Dollar Index. In addition, expectations of multiple US Fed rate hikes before mid-2027 eased, providing support to copper prices. On the fundamental front, with the delivery period approaching, some suppliers continued registering cargoes as warrants, tightening spot availability. A slight correction in copper prices improved downstream buying interest, but high prices kept purchases largely need-based. Overall, copper is expected to remain firm and trade within a narrow range today.

🔹 Aluminium:

US July inflation eased as expected, while July retail sales weakened sharply. The softer economic data reduced expectations of a September Fed rate hike and put pressure on the US Dollar, providing support to LME metals. Aluminium inventories continued to decline. However, UAE-based EGA reported progress in restarting production at its Al Taweelah plant, with 18% of its 1,262 pots restarted so far. Faster-than-expected production recovery could ease supply tightness and cap the upside. In the short term, aluminium is expected to remain firm, although upside potential may be limited.

🔹 Lead:

This week marks the delivery period for the SHFE Lead 2608 contract. The scheduled buildup in lead inventories ahead of delivery has weighed on prices. However, increased maintenance at primary lead smelters, particularly among delivery-brand producers, could provide support to prices. Lead-acid battery demand remains moderate, while downstream purchases are mainly need-based. Overall, lead prices may rebound after testing lower levels.

🔹 Zinc:

LME zinc remained supported by a weaker US Dollar and an expanding backwardation structure. Moving averages continued to provide support, while the upper Bollinger Band acted as resistance. SHFE zinc saw some pressure at higher levels, although the daily price center moved higher. Social inventories in China continued to decline, but weak consumption is limiting the upside. Zinc is expected to remain range-bound, with market focus on inventory trends in China and overseas.

🔹 Tin:

The market witnessed the release of rigid demand after moving sideways within a narrow range at elevated levels, rather than the beginning of aggressive restocking. Ordinary consumer electronics and conventional solder demand remains subdued due to the seasonal slowdown. However, demand for high-end solder related to AI servers and advanced packaging remains relatively resilient. In the near term, demand is unlikely to be strong enough to significantly increase spot cargo volumes.