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Market 1: Copper
Pressure is building below copper’s all-time high as tightness outside the US grows, although headwinds and tailwinds remain on the horizon.
Key points:
Point 1: The inflow of copper into LME warehouses in August led to a brief easing of tightness, but three-month copper prices on the LME have overcome the January highs, opening the way for a move to the $15,000 per tonne level. A move toward that level could materialize as a blow-off top.
Point 2: Treatment and refining charges have fallen to record lows, with the Fastmarkets late-August assessment at $(232) per tonne, compared with $(141.79) at the start of June. This is increasingly squeezing custom smelters’ margins, which may lead to refined production cuts, especially when long-term TCRCs come up for renewal.
That, in turn, could lead to a further drawdown in exchange stocks and push prices and backwardations higher. A ‘super El Niño’ weather phenomenon could tighten the market even further.
Point 3: While the situation looks bullish, the market needs to remain mindful that macroeconomic headwinds could emerge. Bond yields, gold and crypto are rising, suggesting investors are becoming more nervous. Any sell-off in equities would likely drag copper prices lower as well.
Our analysts say:
“Copper’s bull story remains alive for now, and although global exchange stocks are high, the majority is trapped in the US. That could change, but until it does the market is likely to remain tight and the pressure on prices will be on the upside. On the downside, we need to be watching macroeconomic developments.” William Adams, Director of Market Insight, Metals
Market 2: Aluminium
Global aluminium supply set to remain tight in 2026.
Key points:
Point 1: Market attention is expected to remain focused on the pace of recovery at affected Gulf smelters, particularly whether production can return to pre-disruption levels during the second half of the year. While planned restarts could gradually improve supply conditions, uncertainty surrounding geopolitical developments and operational recovery timelines remains a key risk factor for the global aluminium market.
Point 2: US-Canada trade tensions have evolved well beyond Section 232, with the impact increasingly diverging depending on which side of the border market participants operate. The US administration’s aggressive onshoring agenda, supported by the 50% tariff on aluminium imports, has injected new life into the domestic primary aluminium industry. Century Aluminum’s Mt.
Holly smelter has returned to full production, while Magnitude 7’s New Madrid smelter could be next in line as power economics become increasingly viable. Until meaningful new capacity is built, the domestic market will continue to rely heavily on external suppliers. In that respect, the proposed EGA-Century smelter project in Oklahoma cannot arrive soon enough.
Point 3: The LME aluminium market remains supported by a combination of tight physical conditions, low visible global inventories and ongoing supply chain disruptions. Fastmarkets expects these factors to continue underpinning dip-buying interest through the remainder of 2026.
Our analysts say:
“While additional supply is gradually entering the market and may limit the pace of future gains, the current environment still points to a market that is fundamentally tighter than headline supply growth alone would suggest.
As a result, the foundations are being laid for a potentially stronger aluminium price environment in 2027, particularly if inventories remain constrained and new supply additions encounter delays or operational challenges.” Andy Farida, Senior Analyst
Market 3: Nickel
Nickel could rally or plunge pending clarity on key Indonesian uncertainties.
Key points:
Point 1: The nickel market is in a wait-and-see consolidation phase. LME prices are drifting sideways. Clarity is needed on the two major constraints that have been impacting production in Indonesia, the world’s largest nickel-producing nation.
Point 2: The first is the government’s mid-year revisions to its ore quotas. Earlier reports of an increase from its initial and highly restrictive limit of 260-270 million wet metric tonnes (WMT) to a surprisingly generous 360 million WMT were denied. The fact that the higher figure could not be confirmed is subduing nickel prices.
Point 3: The second constraint has been sulfur availability due to disruptions to supply of the chemical reagent from the Middle East. Preliminary trade data showed a surge in Indonesian imports in July. For now, however, this appears to reflect a backlog of material from the Persian Gulf that was shipped during a ceasefire.
We doubt the sulfur squeeze is over and expect it to continue restraining production into 2027. However, the surprise in the July trade data warrants close monitoring, and subdued nickel prices reflect this uncertainty.
Our analysts say:
“LME nickel prices are likely to remain rangebound until there is clarity on Indonesian ore quota revisions and on the status of the sulfur squeeze. Depending on these outcomes, nickel could realistically run up to challenge $18,000-20,000 per tonne again or fall toward $12,000-14,000 per tonne over the next six months.” Andrew Cole, Principal Analyst
Market 4: Lead
Scope for short-term price gains remains.
Key points:
Point 1: Lead has room to rebound, but not yet to break out. Support around $1,850 per tonne remains firm and buoyant risk appetite could lift prices into the mid-$1,900s, but rallies toward $2,000 still require convincing stock draws or stronger battery demand.
Point 2: China’s smelter squeeze is the clearest upside risk. Record-low treatment charges, tight concentrate and scrap availability, and heavier maintenance could deepen refined output cuts, leaving the global market with little cushion against disruption.
Point 3: Bearish positioning could become the rally’s fuel. Funds remain heavily net short, so any tightening in London Metal Exchange spreads, warehouse outflows or seasonal replacement-battery demand could trigger an aggressive short-covering move.
Our analysts say:
“Lead continues to buck positive sentiment, but tightening Chinese supply, record-low treatment charges and firmer physical demand could unleash short-covering gains.” James Moore, Senior Analyst
Market 5: Zinc
Supply disruption risks continue to drive bullish sentiment.
Key points:
Point 1: Zinc is approaching the pivotal $4,000 per tonne level following stellar gains in August. A sustained break above this level could unlock the next leg of the rally, while failure to do so would leave prices vulnerable to a sharp correction.
Point 2: El Niño and diesel shortages are increasing supply risks. With zinc stocks already low, weather-related or fuel-related disruptions could quickly tighten the already deep London Metal Exchange backwardation and trigger sharp price spikes.
Point 3: Chinese exports could ease the squeeze, at least temporarily. Yet low treatment charges, weak margins and winter power constraints raise the risk of Chinese smelter curtailments, limiting export availability and keeping the refined market tight.
Our analysts say:
“Sentiment remains bullish, with the market more comfortable pricing in the growing number and intensity of supply risks. We remain conscious of becoming too bullish in the short term, particularly with broader financial markets becoming increasingly complacent. The ability of zinc to establish a firm base above $4,000 per tonne will be critical.” James Moore, Senior Analyst
Market 6: Tin
Tin remains elevated, but improving supply raises downside risks.
Key points:
Point 1: Prices remain stubbornly high despite fading momentum. LME tin continues to trade around $55,000-56,000 per tonne, while inventories stood at just 5,415 tonnes, with cancelled warrants at 26.5%.
Point 2: Myanmar remains the missing supply response. China imported 16,958 tonnes of tin concentrates in July, but Myanmar shipments fell 27% month on month to 4,570 tonnes. Diversification toward the DRC, Bolivia and other suppliers is cushioning the shortfall but has yet to recreate historical Wa State availability.
Point 3: Demand is stronger structurally than physically. Global semiconductor sales reached $403.3 billion in Q2, while China’s August high-tech exports rose 42.9% year on year. Yet Chinese tin buyers remain price-sensitive, with spot activity still dominated by just-in-time procurement.
Our analysts say:
“Tin is moving from a scarcity rally into a scarcity test. Low stocks mean the market has little tolerance for another supply disappointment, but stable physical buying suggests no acute squeeze. The asymmetry is increasingly important: another leg higher requires fresh disruption, while a correction only requires Myanmar and Indonesia to deliver the supply already expected.” Rory Deng, Analyst
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