Base Metal Fundamental Outlook
Advisory Bazaar Info Services
🔹 Copper
On the macro front, geopolitical tensions between the US and Iran have intensified, with US forces striking Iranian airports and coastal areas, followed by Iranian missile retaliation. Two oil tankers were also attacked in the Strait of Hormuz. Meanwhile, the Russian and Iranian presidents discussed the fragile ceasefire, while the US Treasury Secretary signaled tougher sanctions and the promotion of alternative “bypass routes.” Fed officials also indicated that decisive rate hikes could be required if inflation fails to cool.
The escalation in geopolitical tensions, combined with hawkish monetary policy expectations and a stronger US dollar, has weighed on copper prices.
On the fundamental side, imported copper cargoes have continued to arrive at ports, increasing available supply and easing market tightness marginally. On the demand side, elevated copper prices have led to some pullback in spot premiums, while downstream buyers are largely adopting a hand-to-mouth procurement approach, providing limited support to actual demand.
Outlook: Copper prices are expected to consolidate on a subdued note today.
🔹 Aluminum
On the macro front, hawkish signals from the Jackson Hole central bank symposium and a hawkish tone from Fed Chairman Warsh have revived expectations of a September rate hike. Tighter global liquidity expectations and weaker macro sentiment have created bearish pressure on aluminum prices.
However, continued inventory destocking in China and expectations of stronger demand during the September peak season are providing solid downside support.
With bullish and bearish factors remaining balanced, aluminum prices are expected to continue consolidating at elevated levels.
Outlook: Aluminum is likely to remain range-bound with a firm undertone at higher levels.
🔹 Lead
Overnight gains in LME lead helped SHFE lead stabilize after its recent decline. Continued LME inventory destocking, firm offers from domestic spot suppliers and tight regional supply have provided support to lead prices.
However, macro headwinds, including a stronger US dollar and expectations of tighter monetary policy, may limit the upside in LME lead. In the domestic market, downstream buyers are purchasing mainly as needed, while the availability of secondary and imported lead is limiting follow-through in spot demand.
Outlook: Lead prices are expected to stabilize and trade sideways today. Market participants should closely monitor LME trends and the pace of spot transactions.
🔹 Zinc
Overnight, LME zinc formed a bearish candlestick with a long upper shadow, indicating selling pressure at higher levels. Continued weakness in global bond markets, along with a stronger US dollar and higher US Treasury yields, has intensified concerns over inflation and the possibility of interest rates remaining elevated for longer. This has weighed on non-ferrous metals.
SHFE zinc also formed a bearish candlestick. The retreat in LME zinc following its recent sharp rise dragged SHFE zinc lower, while long position reductions added further pressure to futures prices. However, LME zinc later recovered from its lows, allowing SHFE zinc to recoup part of its losses.
Outlook: Zinc is expected to remain volatile with a cautious undertone. The movement of LME zinc will remain a key indicator for the near-term direction.
🔹 Tin
Overall, hawkish monetary policy expectations and a stronger US dollar are exerting short-term pressure on tin prices. However, tight ore supply and low inventory levels are limiting the downside.
The most-traded SHFE tin contract is expected to remain highly volatile today, with a trading range of 415,000–425,000 yuan/mt.
Market participants should closely monitor downstream restocking activity at lower price levels and progress toward the resumption of production in Wa State.
Outlook: Tin is expected to remain volatile within the 415,000–425,000 yuan/mt range, with tight supply and low inventories providing downside support.