Base Metal Fundamental Outlook

Advisory Bazaar Info Services

Copper

On the macro front, geopolitical tensions in the Middle East remain a key factor. Trump said he is ready to strike Iran again at any time, while Iran indicated that the Strait would be reopened only after the US fulfills its commitments. US August ADP employment increased by just 38,000, below expectations. Fed officials maintained a cautious stance, while the Beige Book indicated a broadly positive economic outlook with slightly higher uncertainty. The US Dollar Index closed lower, providing some support to copper prices.

On the fundamental side, increased arrivals of imported cargoes at ports and contract rollover demand prompted suppliers to increase sales, resulting in a marginal easing of supply. On the demand side, some downstream buyers returned to the market after the recent price correction, but overall purchases remained largely need-based.

Outlook: Copper prices are expected to consolidate with a slightly subdued bias today.

Aluminium

Hawkish signals from the Jackson Hole symposium and hawkish remarks from Fed Chairman Warsh have increased expectations of a possible September rate hike. Tighter global liquidity expectations are weighing on macro sentiment and exerting pressure on aluminium prices.

However, continued destocking in China and expectations of stronger seasonal demand during the September peak season are providing downside support.

Outlook: Aluminium prices are expected to continue consolidating at elevated levels amid mixed bullish and bearish factors.

Lead

LME lead remained weak overnight, while SHFE lead also pulled back during the night session, weighing on spot market sentiment. Meanwhile, dovish comments from US Fed officials have reduced expectations of further rate hikes, while a sharp decline in LME lead inventories is providing support.

In China, tight availability of primary lead cargoes has encouraged suppliers to hold prices firm and limit selling. However, discounted secondary lead supplies and cautious downstream buying have kept transactions subdued.

Outlook: Lead prices may find support at lower levels, although the upside could remain limited.

Zinc

LME zinc formed a bearish candlestick overnight. Escalating Middle East tensions pushed up oil prices and the US dollar, increasing concerns over inflation and interest rates and putting pressure on non-ferrous metals. Increased bearish positioning also dragged LME zinc lower.

However, low LME inventories and tight nearby supply continue to provide downside support. SHFE zinc also weakened initially after following LME losses but recovered partially after finding support at lower levels. Tight domestic ore availability and low treatment charges (TCs) continue to underpin prices.

Outlook: Zinc is expected to remain volatile and consolidate with a cautious bias.

Tin

On the supply side, production in Myanmar’s Wa State has recovered to only around 40–50% of pre-ban levels. Persistent water accumulation in mine shafts, along with seasonal disruptions, continues to limit the recovery in tin concentrate imports.

Indonesia’s refined tin export quota controls remain in place, while tight raw material availability outside China continues to support the market. LME tin inventories have declined to 5,550 tonnes, near a three-year low. SHFE inventories stood at 6,381 tonnes on August 28, showing a slight increase as port arrivals partially offset raw material supply tightness.

On the demand side, the traditional off-season continues, with downstream consumers mainly adopting a just-in-time procurement strategy. However, high-end solder demand related to AI servers, HBM and advanced packaging remains resilient.

Outlook: The most-traded SHFE tin contract is expected to consolidate with a subdued bias today. Support near 410,000 yuan/tonne remains important to watch.