Fastmarkets monthly base metals market update

Key points

1. US copper demand surges amid Section 232 tariff speculation
   The main theme in copper is still the relocation of metal to the US from other regions ahead of the Trump administration introducing possible Section 232 tariffs on the red metal. US copper prices remain at a high premium to LME prices, warehouses outside the US are being drained of US-compliant brands, other brands are being redistributed and LME spreads are deeply backwardated.
   

2. Section 232 tariffs poised to reshape copper trade flows
   Once Section 232 copper tariffs are known and come into effect then many of the current trends, including trade flows, may change direction.
   

3. Record-low TC/RC indexes highlight mining-smelting imbalance
   Fastmarkets’ TC/RC indexes continue to probe record lows, reflecting relative underinvestment in concentrate mining capacity in recent years versus overinvestment in concentrate smelting capacity.

What do our analysts say?

There is tightness almost everywhere you look in the copper markets – from tariff-related regional distortions in the refined and scrap markets to structural imbalances on an unprecedented scale in the concentrate market. For headline LME prices, we could see further gains in the short term beyond the $10,000-per-tonne milestone as tightness intensifies, but we would be wary about the reaction to Section 232 tariffs being announced and in case economic headwinds increase later in the year.

Andrew Cole, Fastmarkets

Key points

1. Aluminium prices surge on supply fears
   LME aluminium price has been driven mainly by the improved macroeconomic landscape and speculative funds buying in June. Its price spiked higher on Monday June 23 toward $2,650 per tonne, driven by supply fear that aluminium supplies in the Middle East could be restricted should Iran choose to block the Strait of Hormuz. More importantly, follow-through buying interest has persisted even after the geopolitical tension in the Middle East eased. Such character change in the aluminium space is bullish.
   

2. Speculative buying from funds increased amid improving macroeconomic backdrop 
   LME fund managers are rebuilding their bullish exposure in aluminium again after a hard reset in the April sell-off. The sell-off saw aluminium net long fund position, which on March 14 stood at 123,290 lots, dip to a mere 819 lots on April 17. Since then, dip-buying interest has supported the net long to edge higher to 44,202 lots, with more room to venture on the upside if the macroeconomic backdrop continues to improve.
   

3. Global aluminium surplus expected but tight inventories can keep bulls in charge
   The global primary aluminium market is projected to be in a surplus of 390,000 tonnes in 2025. In the first five months of 2025, primary aluminium production was just above 30.4 million tonnes, according to data from the International Aluminium Institute (IAI). With a monthly average output of around 6.1 million tonnes, the annual supply in 2025 should reach a new all-time high of 73 million tonnes. Although a surplus is expected, declining exchange inventories in China and the LME continue to create a supportive fundamental backdrop and suggest a test toward the February year-to-date highs could be on the cards.
   

What do our analysts say?

The global macroeconomic backdrop has certainly turned around from the bearish start to the trading year. At Fastmarkets Research, we envisage more trade deals will be concluded over the coming months and supportive economic factors should lay the foundation for an improved demand outlook for the base metal space, which in turn should support higher prices.

Andy Farida, Fastmarkets

Key points

1. LME nickel prices struggle, recovering slightly in June
   The LME nickel cash price remained under pressure in June, falling by 0.58% month-on-month. The price dipped below the 15,000/tonne level early in the month and only just recovered above this level toward the end of June.
   

2. Nickel prices slide amid oversupply and tariff uncertainty
   Nickel has been stuck in a sideways-to-lower trend since April with market oversupply, lukewarm demand and tariff uncertainty all eroding confidence.
   

3. Indonesian nickel permit revocations spark environmental scrutiny
   The Indonesian government revoked four out of five nickel mining permits in Raja Ampat after activists highlighted damage caused by nickel mining. Only PT Gag Nickel, part of state-owned PT Antam, continues to operate in the area since it is outside the affected region. The nickel price did not react meaningfully to the news even though it raises the question of whether other major nickel mining and refining hubs might also come under greater scrutiny.
   

What do our analysts say?

Fundamentally, this oversupply is due more to strong production growth rather than to weak demand. Without greater supply discipline from Indonesia and China, which together account for 78% of global refined production, there is little scope for any near-term market rebalancing and thus for any sustained price recovery.

Olivier Masson, Fastmarkets

Key points

1. LME lead prices break higher, eyeing March highs
   Three-month LME lead prices traded sideways either side of $1,975 per tonne for most of June before breaking higher on June 24, when prices broke above the May high at $2,009 and the downtrend line off the May 2024 peak at $2,359. Prices reached a high of $2,053.50 per tonne on June 30. The break higher opens the way for a challenge of the March highs that lie between $2,094 and $2,104.50 per tonne.
   

2. Lead prices rise despite fluctuating LME stock levels
   The move higher in lead has come about despite the pick-up in LME stocks that stood at 271,925 tonnes at the end of June. So far this year, stocks have ranged between 200,050 and 295,825 tonnes. The stock increases have tended to be few and far between, albeit of significant volume, but outside of these lumpy increases, most days just see regular outflow, averaging around 2,160 tonnes per day.
   

3. Lead’s strong fundamentals could trigger short-covering rally
   With prices breaking higher, we wait to see if the funds that are net short start to cover. Overall, the fund position is polarized with 25,664 lots of longs and 30,380 lots of shorts. Nickel is the only other metal where the funds are net short, but we would say lead’s fundamentals are much stronger than nickel’s. As such, we would not be surprised to see more short-covering in lead.
   

What do our analysts say?

Lead’s recent move higher above $2,000 per tonne opens the way for lead to run up toward $2,100 per tonne. July tends to be a seasonally strong month for lead according to our seasonality analysis. Over the past two decades, it has closed positively on 15 occasions, recording a monthly average price increase of 4.5%.

William Adams, Fastmarkets

Key points

1. Zinc prices supported by seasonality, awaiting smelter cuts for bullish momentum
   Positive price seasonality and a close above the May 14 high could generate additional short-term momentum. But while smelter-level uncertainties are supporting price sentiment, a more significant bullish upgrade to our price forecast will likely require more significant smelter cuts creating a bottleneck between the concentrates and refined market and limiting how quickly additional mine supplies feed through. Presently, we only see the LME cash price averaging $2,900 per tonne during Q3 under our high-case scenario rather than base forecast.
   

2. Tariff uncertainty weighs on zinc demand in 2025
   LME zinc proved the weakest base metal during the first half of 2025 as tariff uncertainty caused demand destruction in key downstream markets such as construction and particularly the automotive sector. Reports that US trade officials are scaling back expectations for reciprocal agreements with key trading partners could provide some relief but will take time to filter through into the real economy.
   

3. Rising zinc supply faces smelter margin challenges
   Various mine projects have greatly improved zinc concentrates availability, which will continue rising with additional capacity scheduled to commence production in the coming months. At the same time, increasing pressure on smelter margins could generate upside price risks if further curtailments limit how much additional mine capacity feeds through and results in a tighter refined market balance.
   

What do our analysts say?

A close above the May 14 high may lead to short-term price gains, but a sustained bullish outlook depends on whether smelter cuts create a bottleneck, limiting the flow of additional mine supplies.

James Moore, Fastmarkets

Key points

1. Tin prices surge in June, leading base metals
   Tin surged 11.6% in June, outperforming all other base metals. The breakout above its six-month ascending channel signalled renewed bullish momentum, although momentum indicators suggest short-term overbought conditions.
   

2. Tin supply recovery slows amid global disruptions
   Supply normalization is slower than expected. Myanmar’s Man Maw mine remains shut, MSC’s smelter in Malaysia is only gradually ramping up, and the DRC’s Bisie mine resumed production but at a measured pace.
   

3. Rising Chinese tin ore imports may limit price gains
   China’s tin ore imports jumped 36.4% MoM in May, driven by DRC flows. However, cumulative imports remain historically low. Historically, tin prices are negatively correlated with Chinese ore imports, suggesting this rise may cap near-term upside.
   

What do our analysts say?

Tin’s June rally wasn’t just technical – it was a stress test of the market’s fragility. The sharp surge in the LME cash/three-month spread – from $45 backwardation on June 27 to $145 on June 30, based on official LME prices – highlighted just how razor-thin the market’s buffer capacity has become. While the pickup in DRC’s production may imply easing tightness, fundamentals remain brittle. .

Rory Deng, Fastmarkets

Key points

1. Disrupted seasonal trends in copper TC/RCs for 2025
   Usually, copper TC/RCs have bottomed, or are bottoming, by this time of the year. Typically, they tend to rise in the third quarter and peak in the fourth quarter. However, this year is exceptional, and the market is far from orderly, so the normal seasonal pattern may not appear in 2025.
   

2. Trading activity delays bottoming of TC spot index
   One possible bottoming warning sign is that smelter buying prices have recently shown signs of stabilising. However, traders are still buying aggressively at even lower levels than smelters. Until traders’ appetite moderates, Fastmarkets’ cif China TC spot index (which is the average of smelters’ and traders’ implied purchase prices) is unlikely to bottom out.
   

3. Contract renegotiations may drive smelting cuts and TC/RC recovery
   Mid-year and annual contracts set in 2024 with positive TC/RCs are providing a precious lifeline to smelters facing deeply negative spot TC/RCs this year. As these contract terms are renegotiated (mid-years now and annuals in the fourth quarter), there is a good chance they will also be settled at negative numbers. This may be the game-changer that finally forces meaningful smelting production reductions. Only once the scale of these cutbacks has recalibrated the concentrate market balance can spot TC/RCs begin to recover sustainably.
   

4. Tariff speculation drives US copper price premium and global metal shift
   The other key dynamic in copper is the huge premium the US copper price holds over LME prices due to tariff speculation. This is draining metal from other regional markets, like Europe and Asia, as hundreds of thousands of tonnes make their way to US shores.

What do our analysts say?

There are bullish fundamental undercurrents in copper due to tariff-related supply distortions, compounded by the threat of supply disruptions created by extreme imbalances in copper’s raw material markets.

Andrew Cole, Fastmarkets

Key points

1. Tariff hike drives US aluminium premium to record high
   While the LME aluminium price action is up 2.4% in May, most of the actions emerged on the physical premiums for delivering aluminium metals to the United States. With the tariff now doubled, it has triggered the daily assessed FM US Midwest premium to a new record high at 54 cents per lb achieved on 4 June, up 28% from the 3 June reading of 42 cents per lb.
   

2. 50% tariff hike raises fears of demand destruction and liquidity loss
   The previous 25% tariff slapped on both aluminium and steel has already raised concern over a potential demand destruction that could take effect over the coming months. With 50%, it has solidified the probability of forcing both businesses and consumers further to the side lines, killing off any liquidity.
   

3. Macroeconomic recovery could lift aluminium prices 
   Fundamentally, aluminium does not have all the drivers necessary to achieve further upside given the healthy supply chain and the not-so-robust demand conditions amid ongoing tariff uncertainty. But a broad recovery in risk-on assets, primarily if the LME copper price can trade to a new all-time high, should also drag the light metal price along to the upside. In fact, aluminium net fund positioning has had a hard reset, with a mere 17,000 lots net long as of 23 May, down from the 2025 high of 123,290 lots. As such, an improved macroeconomic backdrop should encourage funds to rebuild their long exposure again, which could be price supportive.
   

What do our analysts say?

LME aluminium price edged 2.4% higher in May compared to the previous month as the rebound from the April low continues. Barring any trade war surprises, the base metals space looks constructive for a continuation to the upside. This should set up the price in the light metal to continue the rebound in June. A weekly close above $2,550 per tonne should allow bulls to maintain the upward momentum and potentially target the 2025 high at $2,736 per tonne.

Andy Farida, Fastmarkets

Key points

1. LME nickel cash price dips 1.6% in May
   The LME nickel cash price remained in the doldrums in May, falling by a further 1.6% over the course of the month and ending at US$15,105 per tonne.
   

2. US tariff policy uncertainty pressures nickel prices
   Uncertainty regarding the United States’ tariff policy weighed on the nickel price for several months.
   

3. Nickel market faces oversupply and projected surplus in 2025
   Market fundamentals are also weighing on the nickel price. The market remains heavily oversupplied in early 2025, and we expect another full-year surplus.
   

What do our analysts say?

It is difficult to see any near-term bullish narrative for nickel. Data released by the International Nickel Study Group highlighted that the market remained heavily oversupplied in the first quarter of the year, and indeed Fastmarkets forecasts another full-year market surplus.

Olivier Masson, Fastmarkets

Key points

1. Lead prices rally 9.3% before stabilizing
   Lead prices extended April’s rally, reaching a recent high of $2,009 per tonne, based on LME three-month prices. This represents a 9.3% increase from the April low. Prices have returned to the previous sideways trend, and further sideways trading seems likely.
   

2. Lead battery demand steady despite economic shifts
   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. Funds hold short positions on lead despite strong fundamentals
   Despite this characteristic, funds trading lead are net short on lead. They are also net short on nickel but are long on the rest of the base metals. Considering lead’s fundamentals are significantly stronger than those of nickel, we are surprised by the funds’ short position.
   

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. Zinc markets brace for rising supply and volatility
   Zinc faces increasing macroeconomic, geopolitical, and fundamental crosscurrents at the start of June. Declining stocks in China and fresh LME cancellations remain supportive themes. However, we believe they mask the true fundamental dynamics, with rising mining and supply levels set to become more evident. These themes, coupled with the thinner trade conditions traditionally seen during the summer months in the Northern Hemisphere, suggest that base metal prices are heading for a period of increased volatility.
   

2. Zinc prices gain support from rising copper and silver markets
   Positive sentiment elsewhere in the metals sphere remains supportive for zinc price sentiment. Copper has finally reclaimed ground above the early April lows seen prior to the Trump tariff-induced sell-off, while co/byproduct silver is trading at a 15-year high above $36 per oz. This could encourage buying by LME investment funds, given their currently low level of exposure.
   

3. Zinc market surplus predicted amid higher supply in 2025
   Treatment charges for imported zinc concentrates continue to improve amid increasing raw material supply. At the same time, Chinese smelters are well-stocked for the third quarter, with new smelting capacity coming online. We are modeling the global zinc market to record an overall surplus of around 120,000 tonnes in 2025, fueled by supply-side growth.
   

What do our analysts say?

Declining exchange stocks, low speculative exposure, and positive sentiment from elsewhere in the metals sphere could provide bullish impetus in the very short term. Beyond this, however, 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. These conflicting dynamics and converging chart trendlines suggest zinc is heading for a period of increased price volatility.

James Moore, Fastmarkets

Key points

1. Tin prices fluctuate as supply outlook improves
   Tin prices have become choppy, selling off in early May, then rebounding, before selling off again in late May. The choppiness highlights the thin trading conditions and a market transitioning from tightness to one where supply is expected to recover as supply disruptions fade in the second half of the year.
   

2. Tin supply impacted by disruptions at MSC and Myanmar mines
   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. Rumors of a restart at the latter led to the sell-off in late May, but there is little evidence to support this, hence prices rebounded again in early June.
   

3. Low LME stocks may tighten market, boosting prices
   LME stocks are low at 2,440 tonnes. If the outflow continues, the market is likely to get tighter, which may well support higher prices.
   

What do our analysts say?

Consumers are in a difficult position as they juggle the current tight conditions caused by supply disruptions and low and falling LME stocks but also have to be mindful that a recovery in supply later in the year is likely to improve availability. In the short term, there is a risk that tightness in the market will increase.

William Adams, Fastmarkets

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