BASE METAL FUNDAMENTAL OUTLOOK

Advisory Bazaar Info Services

🔶 Copper:

The expiry of the US-Iran peace agreement and Iran’s refusal to extend it have renewed geopolitical uncertainty in the Middle East. Markets are also awaiting policy signals from the US Fed meeting minutes, keeping copper prices range-bound at elevated levels.

On the supply side, domestic and imported cargo arrivals have improved slightly, easing spot tightness. However, downstream buying remains weak due to elevated prices. As of August 17, SMM copper inventories in major regions increased by 15,900 MT WoW to 133,900 MT.

➡️ Outlook: Copper is expected to remain firm but range-bound at higher levels.

🔶 Aluminium:

Weaker-than-expected US July inflation and retail sales data have reduced expectations of a September Fed rate hike. A weaker US Dollar is providing support to LME metals.

Fundamentally, aluminium inventories continue to decline. However, UAE’s EGA has accelerated the restart of its Al Taweelah aluminium smelter, with 18% of its 1,262 pots now restarted. This could put pressure on the previously priced-in tight-supply premium.

➡️ Outlook: Aluminium is expected to consolidate on a firm note, although expectations of production recovery may limit the upside.

🔶 Lead:

As downstream companies resume normal operations after the high-temperature holidays, routine procurement demand has improved, easing pressure from rising lead ingot inventories.

On the supply side, maintenance at primary lead producers may reduce output, while improving margins at secondary lead producers are encouraging some units to restart production, increasing market supply.

➡️ Outlook: Lead is expected to remain range-bound with volatility.

🔶 Zinc:

LME Zinc showed mild weakness at elevated levels, while a weaker US Dollar continues to provide support to base metals. LME zinc backwardation stood at around $82.88/MT, while inventories continued to decline.

However, elevated prices have made downstream buyers cautious, and social inventories increased again to around 270,000 MT, limiting the upside potential.

➡️ Outlook: Zinc is expected to see high-level consolidation, with technical support at lower levels.

🔶 Tin:

Some essential demand has returned after a period of high-level range-bound consolidation, but this does not yet indicate the beginning of aggressive restocking.

Mainstream consumer electronics and conventional solder demand remain cautious due to the seasonal slowdown. Demand for high-end solder related to AI servers and advanced packaging remains relatively resilient, but is not yet strong enough to significantly increase spot cargo volumes.

➡️ Outlook: Tin is expected to remain range-bound at higher levels, with focus on demand recovery.

📌 Overall Base Metal Outlook:

Base metals continue to receive support from weaker US economic data, a softer US Dollar and supply-side constraints. However, elevated prices are weighing on downstream demand, while production restarts and inventory increases in some metals may limit the upside.

➡️ Overall, base metals are expected to trade firm but range-bound at higher levels today.