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Key takeaways:
Most base metals have been in strong uptrends through 2025, since the April Liberation Day sell-off.
The exceptions have been lead and nickel that have tended to trade sideways since the initial recovery off the April lows. All the metals retreated in mid-November on the back of a rout in US equities. That was triggered by concerns about an AI bubble, which turned out to be short-lived.
Copper ended November 2025 at a record high, with tin at a multi-year high – both due to supply concerns. The global economic climate is subdued, but markets are finding buoyancy on the expectation that the Fed will cut rates again when it meets on December 10.
Despite a weak macroeconomic situation, metal demand appears robust due to investment in electrification, datacenters and defence.
Demand for metals is proving resilient in the face of a subdued macroeconomic situation in China, Japan and Europe and uncertainty over the situation in US, due to the earlier government shutdown. Most major economies had manufacturing PMI readings of below 50 in November 2025.
Metal demand is being underpinned by the huge investment going into electrification, AI datacenters and defence. This new demand will be long lasting and will grow geographically as more regions go down the electrification and digitalization routes.
There are concerns that an AI bubble may be building, so any deflating of the bubble may disrupt investment. But, this global phenomenon is unlikely to be derailed for long. There is uncertainty as to whether demand for metals will suffer further in 2026 as more of the impact of tariffs are felt.
China is another unknown. Economic growth is slowing, the property sector remains weak, the labour market is soft, and household confidence is low. The country is experiencing deflation and excessive competition from overcapacity.
So far, government efforts have not reversed these issues. This could go either way for metal demand – further weakness, or a recovery should more stimulus measures be taken.
Aluminium has been the third strongest performing base metal in 2025, behind tin and copper. These two have suffered severe supply disruptions and tightened fundamentals.
Disruption concerns have increasingly started to dominate aluminium’s narrative too, supporting an uptrend in prices that is approaching $3,000 per tonne in early December.
Fundamental tightness will be a recurring theme in aluminium in the coming years. Prices are likely to continue working higher as inventories gradually erode.
China’s primary aluminium capacity ceiling continues to anchor supply growth, preventing meaningful expansion even as power conditions normalise in several provinces.
Demand, however, remains robust. Automotive output is rising, supported by strong new-energy vehicle production; solar value-chain investment is sustaining healthy consumption of industrial extrusion; and accelerated grid spending is bolstering demand for conductor materials. This widening demand–supply divergence reinforces a constructive medium-term view for domestic and global markets.
Copper remains uniquely strained, with record high exchange prices due to supply-demand imbalances in the refined market, and record low treatment charges due to imbalances in the concentrate market.
As we head into 2026, exchange prices appear to have further to rise and TCs further to fall.
The dilemma is that rebalancing the concentrate market requires smelter production cuts, but this will only exacerbate the imbalance in the refined market. In other words, for the TCs to begin normalizing in 2026, exchange prices may be forced higher.
We have revised higher our LME forecasts this month.
The bullish undercurrents driving the upward momentum in copper prices are still valid heading towards the new year. These are likely to feature into the first quarter of 2026 at least.
These include supply disruptions, regional inventory distortions, upbeat demand perceptions around electrification and especially around the build-out of data centers for AI, expectations of further interest rate cuts and policy support generally, as well as intense investor and speculative engagement.
With such strong drivers in play, the uptrend in prices is likely to continue. We look to technical analysis to identify where the next targets could be.
Extremely polarized speculative positioning in LME lead indicates uncertainty and the potential for sharp price swings, especially toward year-end.
In the near term, fundamentals are expected to soften, driven by seasonal factors and increased secondary lead production in China. While price gains in other metals could boost lead, the base case remains for LME lead prices to hover around $2,000 per tonne into 2027.
The global refined lead market is expected to remain balanced in 2026-27, but risks persist, particularly for smelters as TCs for lead concentrate remain under intense pressure, with little supply growth seen in 2026.
Record silver prices, which topped $58 per oz at the start of December, are encouraging producers to accelerate development of polymetallic projects.
Silver Mountain Resources’ Reliquias project is scheduled to reach commercial production during Q3 of 2026. Boab Metals is expected to make a final investment decision on its 70,000-tonnes-per-year Sorby Hills project imminently, which if greenlit could start production towards the end of our current 24-month forecast period.
Nonetheless, we see little scope for meaningful mine production growth over the next 12 months.
China has a significant surplus in zinc production, while the rest of the world faces a shortfall presently.
Chinese exports hit a three-year high in October, but slim margins and logistical challenges are acting as a bottleneck, limiting how quickly the market can rebalance.
The average LME zinc price for 2025 is forecast at $3,218 per tonne, with a slight increase expected in the first half of 2026 due to ongoing regional disparities.
However, prices are projected to decline as global surpluses continue into 2026-27, while macro factors will cause volatility into early 2026.
While some producers reported disappointing third-quarter results and Teck has lowered its Red Dog guidance for 2026-28, we continue to forecast solid mine production growth in 2025-27.
The Aljustrel mine in Portugal is understood have restarted recently. Bunker Hill is scheduled for commissioning in early 2026. Additionally, corporate updates signal projects such as Romina, Rosh Pinah 2.0, Gediktepe and the Gamsberg expansion are on course to provide additional supplies towards mid-2026.
We believe these additions will support further appreciation in spot TCs in 2026, and this was the general consensus during our LME Week discussions. Presidential approval for the Ambler road project and buoyant market sentiment towards copper could attract fresh project investment.
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