Base Metal Fundamental Outlook

Advisory Bazaar Info Services

Copper

On the macro front, the US expanded the scope of secondary sanctions on Iran and imposed additional tariffs on Canadian goods, pushing the US Dollar Index above 99 and putting pressure on copper prices. Subsequently, a moderation in the dollar’s gains supported a recovery in copper.

On the fundamentals side, domestic and imported copper cathode arrivals have declined in the short term, while delays in some imported shipments have further tightened spot availability. However, the rebound in copper prices has dampened downstream buying interest, with companies continuing to focus on just-in-time procurement.

As of August 24, SMM copper inventories across major regions in China declined by 19,700 tonnes WoW to 114,200 tonnes, with destocking reported across all regions.

Outlook: Copper is expected to consolidate at elevated levels today.

Aluminum

Fluctuating macro sentiment and the ongoing Middle East situation continue to influence aluminum prices in both China and overseas markets. The continued destocking of aluminum ingots in China is providing downside support to prices.

However, overseas aluminum production is expected to increase further, driven by newly commissioned capacity and the resumption of production. With the SHFE/LME price ratio recovering and existing orders being gradually fulfilled, export demand is expected to weaken.

Domestic end-user demand in China remains subdued, while the transition from the off-season to the peak season has yet to become clear. Market concerns over peak-season demand also remain.

Outlook: Aluminum is expected to remain subdued and consolidate in the short term.

Lead

In the short term, increased maintenance at primary lead smelters, tighter spot availability and destocking of domestic warrants are providing downside support to lead prices.

However, weak demand, increased availability of imported lead and the pullback in SHFE lead during the overnight session are limiting the upside potential.

Outlook: Spot lead prices are expected to see a moderate correction today. Attention should remain on downstream procurement activity and changes in imported lead supply.

Zinc

Overnight, LME zinc formed a bullish candlestick, with all major moving averages providing support from below. Buying interest outside China remained strong, while the large backwardation structure continued to support prices.

Although LME inventories increased, the rise was relatively limited and overall inventory levels remained low, supporting the upward movement in LME zinc.

SHFE zinc also posted gains, supported by short-term moving averages. However, high prices have kept spot market activity in China relatively subdued. Total inventories remain above 260,000 tonnes, continuing to exert some pressure on the upside.

Outlook: Zinc is expected to consolidate at elevated levels today.

Nickel

Expectations of additional supply from Indonesia following the release of production quotas, along with high inventory levels, are exerting downward pressure on nickel prices. However, a weaker US dollar and cost support are providing a floor.

Outlook: In the short term, the most-traded SHFE nickel contract is expected to trade in the range of CNY 127,000–132,000/tonne.