Base metals market update May 2025

Key points

1. Trump tariffs spark 20% copper price drop, boosting US import incentives
   The 20% sell-off in copper prices, fuelled by Trump’s reciprocal tariff announcement, has benefited those looking to import copper into the US ahead of any Section 232 tariffs on copper. Comex copper prices are commanding a $500-1,400 per tonne premium over LME copper prices, providing plenty of incentive to ship copper to the US.
   

2. Rising regional premiums as traders rush copper to US pre-tariffs
   Regional premiums have also risen as traders seek copper units to send to the US before tariffs are implemented.
   

3. Escalating copper shortage fuels higher Chinese demand for imports
   The shortage of copper concentrates continues to escalate, with treatment and refining charges moving further into negative territory as smelters compete for spot material. The shortage in concentrate, combined with expectations that US exports of copper scrap to China will be restrained by tariffs, means Chinese demand for refined copper imports is likely to increase.
   

What do our analysts say?

Copper prices are likely to remain buoyed while the arbitrage window to import copper into the US remains open. This is expected to reverse if, and when, tariffs are implemented, as copper that would have been shipped to the US is diverted to other markets. There is a risk that prices will sell off again, as they did in early April, if broader markets are spooked by fears of a recession.

William Adams, Fastmarkets

Key points

1. Bearish alumina outlook as China expands capacity, prices fall
   Sentiment among many delegates at the Fastmarkets Bauxite & Alumina conference in early April was bearish. A lower alumina price outlook is the consensus, amid numerous expansion plans in China (adding a potential capacity of 10 million tonnes per year). Global supply appears to have normalised, and as such, Fastmarkets calculated the alumina FOB Australia index at just above $300 per tonne, down from a record high of $800 per tonne in December 2024.
   

2. LME aluminium rebounds, faces limited upside amid market uncertainty
   The LME aluminium price has rebounded from the key Covid low uptrend line (UTL), but it is still struggling to produce a sustainable move to the upside for now. Due to ongoing macroeconomic uncertainty and the low probability of a US-China trade deal, we suspect any upside in the LME aluminium price is limited. That said, we are not ready to remain aggressively bearish. Instead, we are looking for a retest of the $2,300–2,350 per tonne level.
   

3. Global aluminium deficit predicted remainder of year 
   Fastmarkets forecasts the global supply-demand balance for primary aluminium to remain in deficit this year, shifting to a small surplus in 2026.
   

What do our analysts say?

May is often a weak month for aluminium, supporting the adage ‘sell in May and go away.’ This complements our overall neutral short-term bias on aluminium, where we see $2,500 per tonne as the key resistance level and warn that prices may need to consolidate lower first after the April rebound. Still, the LME aluminium price trades above the Covid-low uptrend line, and given its current oversold position, a healthy consolidation near the recent low in May looks encouraging.

Andy Farida, Fastmarkets

Key points

1. Tariffs spark volatility, nickel prices dip to $13,815
   The US’s tariff communication sent nickel on a roller-coaster ride in April. Although the end-April price of $15,375 per tonne was only 2.2% lower than the end-March price of $15,715 per tonne, the uncertainty caused by the flurry of executive orders on US tariffs sent the LME nickel price to a low of $13,815 per tonne in early April.
   

2. Nickel prices recover but stay below $16,000
   The drop caused by the US tariff announcements, and the fears of tit-for-tat reprisals, was relatively brief. Despite the subsequent recovery, the LME nickel cash price remained below $16,000 per tonne throughout April, underlining the metal’s weak fundamentals.
   

3. Nickel payables rise amid supply strains and plant closure
   Although the LME nickel price has remained under pressure, payables for mixed hydroxide precipitate have jumped because of the limited spot availability of material. Moreover, the closure of BHP’s IRA-compliant Nickel West plant towards the end of last year has limited the availability of IRA-compliant briquettes for the nickel sulfate industry, sending premiums higher.
   

What do our analysts say?

Data from the International Nickel Study Group points to the nickel market remaining heavily oversubscribed in early 2025, and Fastmarkets forecasts a third consecutive annual market surplus above 100,000 tonnes in 2025. With such fundamentals, it is difficult to envision any sustained recovery in the nickel price unless demand growth accelerates, or the supply side shows greater discipline.

Olivier Masson, Fastmarkets

Key points

1. Lead prices show smallest decline among base metals in tariff sell-off
   Lead prices declined the least, at 12.7% compared to an average of 17.8% across base metals during the reciprocal tariff sell-off.
   

2. Lead-acid batteries drive stable demand despite economic fluctuations
   Lead-acid batteries for vehicles are relatively inelastic to economic growth. If new vehicle sales are weak, resulting in lower demand for OEM batteries, replacement battery demand tends to pick up. This explains why lead has reacted less than other metals.
   

3. Tariff uncertainty hits lead-acid battery demand for energy projects
   However, demand for lead-acid batteries for energy storage and power backup projects could be negatively impacted, as the uncertainty caused by tariffs leads to delays in investment decisions.
   

What do our analysts say?

Lead’s fundamentals point to a balanced market this year, and with lead-acid batteries being an essential component of any vehicle, demand tends to be price inelastic. As such, we would expect any sell-off in lead prices to be seen as a restocking opportunity.

William Adams, Fastmarkets

Key points

1. China’s economic caution spurs electronics growth, challenges zinc demand
   There are some demand bright spots in China, even as the authorities maintain a cautious approach to supporting the economy. The trade-in scheme for consumer electronics continues to drive strong production growth for white goods, as authorities accelerate the construction of ultra-high voltage (UHV) transmission lines to connect new energy projects. However, China’s property market is still going through a painful deflation phase, while efforts to tackle steel sector overcapacity remain significant headwinds for zinc demand.
   

2. Zinc prices poised for short-term boost amid bullish signals
   The double-bottom on the charts at $2,500 per tonne on April 7/9 is a potentially short-term bullish signal for zinc. This, combined with the current net short held by LME investment funds, could generate a modest price recovery if more trade deals and tariff backpedalling are seen in the coming weeks.
   

3. Smelter cuts fall short as zinc faces oversupply and lower prices
   Increasing cost pressures for smelters have prompted some to lower or even shutter production capacity. This will help negate the impact of tariff-related demand destruction, but without significant restraint, it will fail to offset the bearish narrative as various new and restarted mining projects continue to feed through. We still anticipate zinc trading in a lower price range in the second half of this year as the market transitions to a period of oversupply.
   

What do our analysts say?

Zinc has scope to recover from current oversold levels if trade tensions continue to ease. However, we still envisage zinc trading in a lower price range in the second half of this year as weaker fundamental drivers feed through.

James Moore, Fastmarkets

Key points

1. Tin prices plunge amid tariff war and DRC mining resumption
   Tin’s early April sell-off was extreme. Adding to the downward pressure from the tariff war was the news that Alphamin Resources would resume mining at its Bisie mine in the Democratic Republic of the Congo (DRC), now that rebels have vacated the area.
   

2. Tin supply woes deepen with smelter halt and Myanmar mine closure
   There are still two supply disruptions in play: the halt at Malaysian Smelting Corp’s (MSC) Pulau Indah smelter, following a gas pipeline explosion, and the ongoing disruption at the Man Maw mine in Myanmar, which remains closed. The latter appears far from restarting, as authorities are still in discussions with the former mine operators. New and more expensive mining fees may also discourage some miners from returning. The duration of the MSC disruption remains uncertain.
   

3. Low LME stocks and concentrated warrants drive market tightness risk
   LME stocks are low, sitting at approximately 2,700 tonnes, with one entity holding 30-70% of the warrants. This increases the risk of tightness in the market.
   

What do our analysts say?

Tin prices were hit hardest during the early April sell-off, dropping 24.7% from their March high, compared to an average 17.8% drop across the base metals complex. Prices have since rebounded. The outlook will depend on how quickly production restarts at MSC and Man Maw. In the short term, there is a risk that tightness in the market will persist.

William Adams, Fastmarkets