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By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
StoneX Senior Metals Analyst Natalie Scott-Gray explains why LME Week matters and sets out how macro conditions, fundamentals and investor positioning will shape base metals in the year ahead.
Natalie describes LME Week as the Davos of the base-metals world where participants across the supply chain share views, strike deals and influence market direction. “Outcomes from LME Week in their own right can actually move the market”
She outlines a modestly warmer macro outlook supported by an aggressive U.S. rate-cutting path that pressures the dollar, lowers yields and can aid demand if manufacturing PMIs hold in expansion. Momentum in China may build around the start of the Fifteenth Five-Year Plan, though deflation worries, weak confidence and property strains remain. Volatility has followed prior China announcements, with sharp rallies that faded.
Key dates highlighted include 14 October for a potential U.S. Supreme Court appeal on country-based and fentanyl-related tariffs, mid-November for the truce deadline on lower U.S.-China tariffs, and May next year when the Federal Reserve chair steps down, a point likely to shape rate expectations. “We could see a little excitement at the beginning of the year and some price volatility”
Across the six LME metals, the balance is broadly even with gentle year-on-year acceleration in both demand and supply. Growth is concentrated in fast-growing uses such as AI and data centres, renewable energy and new electric vehicles, with emerging Asia outside China outperforming advanced economies. Supply disruptions tend to impact prices faster than demand changes, so supply risks carry greater weight.
Investor positioning can pull prices away from macro and fundamentals. A recent example was copper’s surge on heavy net longs that did not persist. Metals with robust demand stories such as copper and aluminium are the most exposed to positioning swings.
The index is expected to post a modest year-on-year gain. Within the suite, tin, aluminium and copper are favoured given structural supply pressures against durable demand, with tin the most volatile due to market size. Lead is seen as benign with steady replacement demand and elevated stocks. Zinc faces a move from deficit to surplus and demand tied to construction and steel, while nickel is the least favoured amid a building surplus and high stocks.
Tariffs add complexity. Section 232 measures touch copper, aluminium and autos. For copper, U.S. tariffs on semi-fabricated products raise costs for downstream users but are not seen as a global game changer. Aluminium faces broader 50% tariffs across refined and derivatives, lifting U.S. prices and rerouting trade flows. Divergent inventories underscore the complexity, with U.S. stocks low and Shanghai levels healthier.
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--- Written by Gus Farrow
--- Expert: Natalie Scott-Grey, StoneX Senior Metals Analyst
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