Base Metal Fundamental Outlook

Advisory Bazaar Info Services

🔶 Copper:

Continued growth in LME inventories is keeping pressure on copper prices. However, weakness in the US Dollar Index and the possibility of an increase in the US Treasury bond buyback limit are providing some support. Domestic supply has increased slightly, while imported arrivals have declined, easing spot tightness to some extent.

China’s SMM copper inventories rose by 17,700 MT WoW to 134,400 MT as of August 20. Downstream buying remains largely need-based.

➡️ Outlook: Copper is likely to consolidate within a range at elevated levels, with limited upside in the near term.

🔶 Aluminium:

Volatility continues in both domestic and international markets amid changing macro sentiment. Meanwhile, continued declines in aluminium ingot inventories are providing downside support. However, the SHFE/LME price ratio needs further improvement, and export demand could weaken after the delivery of existing orders. Domestic end-user demand remains moderate.

➡️ Outlook: Aluminium may remain under pressure in the short term, with a consolidation bias.

🔶 Lead:

SHFE Lead 2610 gained after opening, while LME Lead also strengthened. The combined firmness across domestic and overseas markets has lifted the price center. SMM #1 Lead prices increased by 50 Yuan/MT yesterday. However, higher prices are making downstream buyers more cautious, keeping fresh spot purchases limited.

➡️ Outlook: Lead is likely to remain firm at higher levels but may consolidate. Monitor fund flows and spot demand closely.

🔶 Zinc:

LME Zinc continued to rise with support from the 20-DMA. LME inventories declined again, while Cash-3M backwardation increased to $132.37/MT, indicating short-term supply tightness and concentrated fund positioning. SHFE Zinc also improved, but China’s social inventories increased to 270,400 MT, which could limit further upside.

➡️ Outlook: Zinc is expected to remain relatively strong with volatility at higher levels, although rising domestic inventories may cap gains.

🔶 Tin:

Tin recovered from lower levels, but the rebound was driven mainly by limited selling pressure rather than active restocking demand. The solder industry’s operating rate stood at 72.8% in July, down 6% MoM. High-end solder demand linked to AI servers and advanced packaging remains strong, but it is currently insufficient to provide significant support to spot-market volumes.

➡️ Outlook: Tin needs confirmation from stronger fundamental demand to sustain the recovery. Short-term volatility is likely.

📌 Overall Base Metal Outlook

Copper and Zinc remain relatively stronger, while Aluminium may continue to face pressure. Lead is expected to stay firm at higher levels, whereas limited demand in Tin could keep volatility elevated.