By: Dan Morales, Copywriter • Production
Key Takeaways
StoneX's Base Metals Outlook report from Senior Metals Analyst Natalie Scott-Gray reflects the turmoil the base metals market has been subjected to for the past six weeks. Since US President Trump's April 2 "Liberation Day," base metals has moved from the second-best performing commodity group to the second-worst performer due to rising global trade uncertainty. But recent de-escalation in geopolitical tensions between China and the US have buoyed the outlook for base metals in the near term.
Starting on May 14, the US and China will reduce trade tariffs on each other by 115%, leaving total US tariffs on Chinese goods at 30% while Chinese tariffs on US goods will stand at 10%. The US will also lower its de minimis duties from 120% to 54% while maintaining a flat $100 fee, reversing a previous policy enacted under President Trump. The De Minimis Exception is a bipartisan law allowing imports of $800 per person per day to enter the US duty-free.
Scott-Gray explained that the price performance of the LME Base Metal Index (LMEX Index) over the past eight years offers two primary takeaways. First, escalating geopolitical tensions is one of the most significant downward risks to price forecasts. Second, during the 2018-2019 China-US trade war, base metal prices became "trapped" in a sideways trading pattern. And, since 2023, the LMEX index has been unable to hold above that sideways trading pattern. Scott-Gray suggested the market has found a 'new normal' trading range, brought on by the dramatic market moves inflicted by COVID-19.
Fast-forward to where we are in 2025. President Trump's initial April 2 announcement of reciprocal tariffs on all trading partners and over 100% tariffs on Chinese goods resulted in each metal of the suite recording a negative price performance.
Scott-Gray expects a reduction in geopolitical tension to provide only modest support to base metal prices in the near term. The impact of global tariffs has yet to be fully reflected in hard economic data readings, while a further escalation in sector-specific tariffs should not be ignored. Scott-Gray believes we could see up to 25% tariffs on pharmaceuticals, semiconductors, timber/lumber, copper, and critical minerals in the months ahead.
China's Q2 economic growth outlook remains shaky as key economic indicators show weakness. While March numbers showed GDP growth and industrial production (IP) improved year-over-year; retail sales (RS), fixed-asset investment (FAI) and the unchanged jobless rate remain troubling.
On May 7, Chinese policymakers announced broad-based stimulus measures to boost the slumping economy. These included cutting the 7-day reverse rate and the reserve requirement ratio, alongside a targeted rate cut for automotive finance and policy banks. Scott-Gray said the government is also expanding lending quotas for sectors like technology, agriculture, and small enterprises. These moves aim to stabilize domestic demand and investment amid a challenging economic climate.
With a continued strong labor market and the inflationary effects of the tariffs still unknown, Scott-Gray believes the Fed will remain committed to balancing the country's maximum employment and price stability. As a result, only a minimal rate cut is anticipated this year, with no significant policy action expected before June.
Read the full report here.
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---Writer: Dan Morales
---Expert: Natalie Scott-Gray, Senior Metal Analyst
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