By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Annual LMEX Index Price Performance
YTD Price Performance of LME 3M Base Metals
YTD Price Performance of Commodities By Sector
LMEX Index - Key Macroeconomic Drivers Over the Last Eight Years
The base metal index closed Q3 up 3.5%, marking a notable shift in the outlook for the suite after prices were almost flat in Q2 (0.8%) on increased global trade uncertainty. The robust performance over the last several months has centered around weakness in the US dollar, which has been hovering around its lowest level since the start of 2022, following market participants pricing in three rate cuts in 2025. This in turn, combined with our expectations for ~100bps of rate cuts in the US in 2026, has warmed the macroeconomic landscape for industrial metals, with building expectations for cyclical demand recovery. In addition, as we enter Q4, activity in China should benefit from seasonal demand given ‘Golden September and Silver October’, the country’s peak construction season, supporting consumption for nickel, copper, aluminium and zinc. In a similar vein, it’s important to note that 2026 will mark the start of China’s 15th Five Year Plan, with market focus on December’s Central Economic Work Conference, which often acts as a precursor to the Two Sessions meeting in March. Here, we expect China to outline additional policy and stimulus measures to support domestic growth, benefiting the outlook for infrastructure spending on key metal intensive areas such as NEV, the national grid, renewable energy and digital applications.
Correlation of Copper Versus US Dollar
Base Metal Index & Copper Prices Post 100bps Decline in US 2Y Yields
Advanced Economies PMI Manufacturing Versus U.S. Rates
However, downside risks may present themselves in the form of a further escalation in geopolitical tensions, with no end in sight for the Russia-Ukraine war and conflict in the Middle East. Meanwhile, uncertainties remain over the global trade landscape, with BRICS nations forming closer ties against the west, and China and the US yet to have agreed a trade deal. Indeed, attention should be paid to key dates over the next three months, including:
Copper:Gold Ratio
Zinc has posted the most significant gains over the quarter, up 7.6%, however, it remains in negative territory over the year, down 0.6%. Zinc price softness has largely been driven weak demand dynamics with the outlook for zinc’s largest end-use in galvanizing steel (e.g. construction), under pressure from an ailing property market in China and downgrades to global growth due to tariff implementation, limiting advanced economy demand. In addition, robust mine supply has negatively impacted investor sentiment for zinc, easing a significantly tight supply profile over the 2022-2024 period. We forecast that zinc will transition out of a deficit market this year to post building surpluses in the years ahead. However, as it stands, current price strength is being underpinned by multi-year low LME warehouse stocks, supporting a widening backwardation structure, with material being taken out of Asian warehouses into Europe and the US. This in turn is causing a divergence in global pricing for zinc, with zinc on the LME at a premium to that of the SHFE, muddying a clear market trend.
Tin holds the position as the second best performing base metal over the quarter, and leading base metal for the year (+21.8%). Gains have been underpinned by ongoing supply tightness with Chinese refined output remaining in the red on the back of limited exports from its largest importer Myanmar, while global visible exchange stocks remain depleted. Looking ahead, with mine production in key producing regions (Indonesia, Myanmar and the DRC) still in recovery mode, in addition to tin’s small market size, we see tin prices as vulnerable to the upside. However, having said this, with LME speculative positioning hovering near record long highs, the question of just how much higher prices can go, must be asked.
Copper holds the position as the third best performing base metal over the quarter, up 4.0%, with annual gains of 17.1%. At the time of writing, copper prices over 2025 have been almost solely driven by two factors, firstly by expectations surrounding the outcome of US tariffs by Section 232, lifting LME Copper 3M prices well above their fundamentals on artificial tightness over H1. Before prices then became tightly bound to US dollar volatility, with the September FOMC 25bps rate cut marking the first time the Federal Reserve moved to cut rates under Donald Trump’s second term as President.
Looking to year-end, with the COMEX-LME arbitrage having fallen back to levels at end-2024, we expect copper to gradually take back its characteristics of being Dr. Copper and once again be relied on as a bellwether for the global economy, given copper’s universal use in various industries. With this in mind, we expect a sharp refocus on copper’s underlying fundamentals to predict future prices, with copper’s latest move above $10,200/t a direct result of increasing supply concerns, most notably with developments in Indonesia. Indeed here, on the suspension of all mining operations at the world’s second largest copper mine, Grabserg (following a mudslide with forecasts for a return to pre-accident product levels not occurring until 2027), we have lowered our production forecasts for 2025 and 2026. Copper mine supply is now on track to post it first annual decline since 2017 this year, with refined output growth of just 1.0% Y/Y. This is set against steady demand growth 2.0% Y/Y, supported by copper’s use in renewables, the power sector, NEV and digital applications, pushing the market into a modest deficit of 124,000t, from a surplus market in 2024.
Aluminium posted gains of 3.2% over the quarter and 5.1% over the year, however, it has been unable to keep pace with copper and tin this year, with the negative impact of trade uncertainty resulting in the World Bank downgrading global growth in 2025, in turn limiting the outlook for aluminium’s largest end-use sector, the construction market. Meanwhile, the impact of Section 232 tariffs on all aluminium and derivate products set at 25% on 12th March and then 50% on 4th June, was priced-in early, with the negative impact of higher domestic prices well understood (given that aluminium faced similar, albeit lower tariffs on imports during Trump’s first term in office). Furthermore, despite robust demand for aluminium in China in fast-growing demand areas such as solar and renewable energy, overcapacity in the sector is set to see growth levels having peaked in H1, while domestic production for China is on course to hit a new record this year. Looking to the months ahead, attention will be paid to the disparity in global stocks, challenging the outlook for a global price trend, with regional divergence expected. However, upward momentum should be supported by low stocks on the LME and indeed seasonality demand in China.
Nickel price gains have been limited over the quarter, holding flat with prices down 0.6% year-to-date. Despite nickel hovering below $15,500/t over H2, putting increasing pressure on both mine and smelter profitability (especially ex-Indonesia). The reality of healthy refined stocks (which across LME and SHFE have risen 35% YTD), has pushed global visible inventory to their highest level since 2018, reflecting the backdrop of modest demand and the impact from the LME’s fast-tracking of Chinese and Indonesia brands.
Lead holds the position as the weakest performing base metal over Q3, with prices down 2.8% over the period, although up 1.9% for the year. This mid-range price performance is not surprising given lead’s unique fundamentals, in which two-thirds of supply comes from secondary sources, with a balanced market resulting in lead taking price cues from copper. Looking ahead, we expect lead to remain in a tight range towards year-end and into 2026 with potential upside supported by a warming macroeconomic outlook on lower western interest rates and Chinese stimulus, while cold-weather will increase seasonality demand for lead-acid battery replacement.
This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.
The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.
References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.
StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.
R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.
StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.
This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism. SAP is an “Approved International Trading Company” authorized to act as a “Spot Commodity Broker” under the Commodity Trading Act.
StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).
SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.
StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.
StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.
StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
© 2026 StoneX Group Inc. All Rights Reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
China property and construction weakness is quietly capping demand across the base metals suite, even as high-tech exports boom. The split leaves copper and battery metals leaning on targeted industrial policy rather than a broad economic rebound.
DRC Bans Copper and Cobalt Exports - What Do We Need to Know?
An overdue U.S. Section 232 ruling on refined copper could land in four very different ways, from immediate tariffs to none at all. Each path points copper supply and the COMEX-LME arbitrage in a distinct direction for buyers on both sides of the Atlantic.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
