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LME Week 2025 opens in London on Monday October 13, but the annual gathering comes at a time of fractured global markets, with copper supplies squeezed, aluminium grappling with the EU carbon border tax and the aftermath of Trump’s tariffs still rattling supply chains.
With the European Carbon Border Adjustment Mechanism (CBAM) just under three months away from entering its “definitive” period from January 1, 2026, the aluminium market continues to brace for the introduction of additional costs while faced with a lack of clarity over the CBAM benchmarks provided by the European Commission.
CBAM liabilities for the 2026 reporting period will not be fully known until the second half of 2027, due to the delayed sale of CBAM certificates and the volatility of EU Emissions Trading Scheme (ETS) allowance prices that the CBAM certificate prices will be tied to.
On September 29, the European Commission announced that CBAM and ETS benchmarks would be published in “early 2026,” which intensified concerns over the lack of transparency over costs before their introduction.
The lack of clarity over the exact costs to be faced by importers next year has prompted a rush to secure units ahead of time, with the scramble leading to a sharp increase in aluminium P1020 premiums in Rotterdam in recent months.
Fastmarkets’ twice-weekly assessment for aluminium P1020A premium, in-whs dp Rotterdam was $250-280 per tonne on October 7, up from $220-250 per tonne a month earlier.
And Fastmarkets’ daily aluminium P1020A premium, in-whs dup Rotterdam was $185-200 per tonne per tonne on October 9, up from $150-170 per tonne one month earlier.
Following an extensive market consultation, Fastmarkets’ benchmark assessment for the European aluminium P1020A premium, on an in-warehouse duty-paid Rotterdam basis, will become inclusive of additional CBAM costs from January 2026. Fastmarkets is also seeking feedback on whether to include additional CBAM costs in its benchmark aluminium P1020A premium fca dp premium assessments for Italy and Spain from January 1, 2026.
Aluminium market participants are also closely tracking the outcome of ongoing trade talks between the US and Canada – the only major economy yet to establish a trade deal with the US in 2025.
“We are seeing signs that trade tensions between the two powerhouses are thawing… with the year end fast approaching, a trade deal with Canada is [up] in the air, but that is only a trade deal. Section 232 could remain a separate issue, meaning that the 50% tariff on aluminium remains for the foreseeable future,” Fastmarkets analyst Andy Farida said.
The US implementation of a 50% tariff on aluminium imports from Canada earlier this year has diverted tonnes to the European market.
EU countries imported 5,091,852 tonnes of aluminium from Canada in July and 6,092,307 tonnes in June, with both months up sharply compared with May’s 1,444,509 tonnes, according to the latest Eurostat data.
Sources told Fastmarkets that a trade deal that reduces import tariffs on aluminium could drive European P1020 premiums higher as importers could have to compete for Canadian tonnes with US importers.
“If a trade deal is secured, it will be the first sign that maybe Section 232 could be next in the line of discussions, but we need to see a definitive cut first before the premiums, [such as the US] Midwest [one], can react lower,” Farida said. “Once its confirmed, it could be argued that Canadian units would no longer go to Europe and supply tightness should support Rotterdam premiums to edge higher.”
Fastmarkets’ aluminium P1020A premium, ddp Midwest US, was assessed at 76-78 cents per lb on October 7, unchanged from October 3, but up from 76-64 cents per lb on September 30, which sources said was a level that had begun to attract Canadian units.
Copper concentrates benchmark negotiations are expected to dominate LME Week discussions as market participants grapple with a pricing system under unprecedented strain, while the cathode market puts the US tariff saga to bed… for now at least.
The 2026 treatment charge/refining charge (TC/RC) benchmark remains the biggest question mark, with sources telling Fastmarkets that predictions range from negative $(10)s to the positive single digits per tonne. This compares with the mid-year benchmark of $0 per tonne agreed between Chilean miner Antofagasta and Chinese and South Korean smelters for some 2026 supplies – down from $21.25 per tonne for 2025.
“The benchmark system as we knew it is structurally broken,” a trader told Fastmarkets, attributing the pressure on the system to China’s growing share of custom smelting and the market’s shift toward spot-driven transactions.
Fastmarkets principal analyst Andrew Cole said that annual benchmark terms in the fourth quarter were “likely to be set at or below zero,” removing a key lifeline for smelters relying on this year’s benchmark.
Despite negative spot TCs and China’s Copper Smelters Purchase Team (CSPT) withholding quarterly guidance, no major Chinese smelter has closed this year, with several reporting decade-high profits driven by elevated by-product revenues including gold and sulphuric acid.
Smelters outside China have faced harsher conditions, with Glencore’s PASAR in the Philippines, Sinomine’s Tsumeb in Namibia, and Japanese facilities operated by Mitsubishi Materials and JX Nippon announcing closures or output cuts.
And contrary to predictions from last year’s LME Week, and despite the record-low TC/RCs, the European smelter sector has withstood the pressure with no reported closures, a source from South America told Fastmarkets.
The entry of oil and gas traders into the copper concentrates market has contributed to the creation of what a mining source described as a “bifurcated market” between trader and smelter pricing. Fastmarkets’ copper concentrates counterparty spread – which measures the gap between smelter and trader buying levels – hit unprecedented levels in the $40s per tonne this year.
On the cathode side, the arbitrage between COMEX and the LME reached close to $3,000 per tonne this year before the US granted an exemption on the planned 50% tariff. But front-loading ahead of the August 1 deadline left COMEX stocks at a 22-year high, with what some sources estimated to be 600,000 tonnes stockpiled off-market in the US, creating ongoing oversupply that traders said will not be cleared until the first quarter of 2026.
With an estimated 840,000 tonnes of mine production lost this year to unplanned outages, accidents and operational problems, LME copper prices surged to highs above $10,800 per tonne in October. This has fueled debate over whether supply constraints will drive the market through 2027, with all eyes on the biggest supply shocks at Grasberg in Indonesia, Quebrada Blanca in Chile and Kamoa-Kakula in the Democratic Republic of the Congo (DRC).
The question of which trading house has been pulling zinc stocks from LME warehouses is likely to be a hot topic of discussion at LME Week.
LME zinc stocks declined further to 38,250 tonnes on October 8, continuing a trend that started in July. Stocks have dwindled even as demand for the galvanizing metal has been weak – both from China’s property market and from the European automotive industry, traders told Fastmarkets.
While the LME zinc price has steadied on the back of declining stocks, supply is expected to be in surplus come 2026 when key mines in the DRC, Europe, Peru and China continue to ramp up production. Supply is also being boosted by ramp up at Russia’s Ozernoye mine, which is shipping to smelters in China.
But weak demand in China, slowing global economic growth, and challenges accompanying trade tariffs are an existential headwind to the LME zinc price.
The abundant supply and the direction of TCs, including the benchmark for 2026, are also likely to be among the most discussed topics.
Conversation can be expected to focus on whether zinc concentrates TCs will continue rising, buoyed by uninterrupted supplies from mines before smelter capacity in China ramps up, traders told Fastmarkets.
Learn more about this base metal with Fastmarkets’ news updates and price charts