DRC Bans Copper and Cobalt Exports - What Do We Need to Know?
DRC Bans Copper and Cobalt Exports - What Do We Need to Know?
Natalie Scott-Gray
- Base Metals
Weekly Base Metal Macro Economic Slides
By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Weekly Base Metal Macro Economic Slides
Key Takeaways:
Market Overview & Macro Themes
o Highlighted a disappointing week for base metal prices, with only zinc and aluminium holding gains; most others in decline.
o Mentioned, we do have a warming macroeconomic outlook running in the background on expectations for western rate cuts, Chinese stimulus, Chinese peak consumption season, China’s move to limit overcapacity and potential new policy announcements in Q4 (e.g. Central Economic Work Conference).
o Noted that price movements are currently driven more by the US dollar than by strong fundamental demand.
o Stressed that while the macro backdrop is supportive, significant fundamental demand drivers are still lacking, keeping prices subdued.
Metal-Specific Insights
o Copper: Awaiting bullish themes to materialize; peak construction season in China should boost demand, but high prices are delaying inventory drawdowns. SMM forecasts a significant drop in September copper output due to tight anode supply, but data is pending.
o Aluminium: Noted a global divergence in stocks, with US stocks at their lowest since 2019 due to tariffs, and LME stocks low but expected to rise with imports into Europe. The 100,000t stock cancellation out of LME Asia warehouse is supporting prices this week.
o Zinc: Regional disconnect with falling LME stocks supporting prices, but bearish funds entering after a five-month price high. Chinese supply remains strong, but maintenance and overcapacity cuts may offer support. No clear global trend.
o Lead: Chinese smelters started winter stockpiling earlier than expected, tightening supply and pushing treatment charges to historic lows. Secondary smelter cuts are tightening supply, but demand is entering its off-season.
o Nickel: Jakarta protests caused supply concerns and price spikes, but gains have since been reversed. Focus is now on stainless steel demand, with some optimism as inventories destock.
Major Industry News
o Discussed the potential Anglo American–Teck merger (“Anglo Tech”), which could create a top-five global copper producer responsible for about 5% of global mine output. Noted the deal’s dependency on Canadian government approval and the possibility of other proposals.
o Addressed whether mergers solve supply shortfalls: mergers help operators share resources and reduce risk but do not increase global output unless new mines are discovered, which takes 12–14 years for copper.
o Mentioned Anglo’s ongoing portfolio simplification, including exiting platinum, trying to sell De Beers diamonds, and coal assets.
Macro Data & Policy
US: Weaker dollar is influencing prices; house view is for two 25 basis point rate cuts this year, not the three the market expects.
EU: No rate cuts expected at the current meeting; focus on future guidance.
CHINA: Last week we had the release of PMIs, which outlined an acceleration in activity growth. Meanwhile this week we’ve had trade figures and for the first time in months, there appears to be some concerns about the health of exports, which came in at their lowest level since reciprocal tariffs were first announced in April. Unsurprisingly, US shipments remain deep in the red, meanwhile concerns now build for other countries being able to absorb higher exports levels from China.
Risks:
1. Non-US countries increase anti-dumping duties in China
2. Limited information on how US transshipment tariffs will impact future export demand
3. South Korean exports (a bellwether for global trade in the Asia) has fallen to its lowest level since May
Note, in July exports to non-US regions amounted to $2.5Bn, in August they were only $683M. In addition, while exports have been robust in volume this year, they have not been in price. For example, since mid-May 2023, almost every month has seen goods prices decline. Meanwhile, imports posted growth of just 1.3% Y/Y, down from July and below expectations.
The August CPI came in below expectations, falling by -0.4% from 0.0% in July, with markets pricing in concerns over the country being on track to post a 10th month in contraction for the GDP deflator. The fall was largely driven by food prices and effect of a high base from last year.
However, core CPI rose to an 18-month high of 0.9% (although still below market expectations), suggestive that domestic policies are working in part to stimulate demand. Meanwhile, although factory-gate price declines narrowed to 2.7%Y/Y, from 3.6% in July, this marks a 34th month in contraction, with the governments anti-involution campaign likely to come to the fore, given that output prices in some upstream sectors such as a mining and process of metals rose for the first time in months.
In our view, while we may be seeing the initial signs of an easing in deflationary pressures in China, with the rise of core CPI and modest narrowing in PPI declines, the outlook for inflation remains fragile, especially considering that property prices continue to fall and the weaker than expected impact from government subsidies. We expect China will continue to focus on its anti-involution campaign.
Policy Announcements & Risks
o Upcoming Chinese credit data and new tax support measures for social security funds were flagged as supportive.
o Cautious outlook for China, with both bullish and bearish arguments; expects some positivity in Q4 with policy announcements and peak construction.
o Highlighted ongoing macroeconomic risks: US tariffs, French political instability, and BRICS cooperation on rare earths, with Russia and China in talks.
Aluminium & Trade Policy
o Detailed the complex divide in global aluminium inventories, with LME stocks low but expected to rise, US stocks depleted, and Asian stocks entering peak season.
o Noted the EU’s pending decision on aluminium scrap exports, which could impact prices and trade flows due to US tariffs not covering scrap.
Iron Ore & Construction Materials
o Entering “golden September, silver October” peak season, supporting iron ore, steel, copper, aluminium, nickel, and zinc. Iron ore prices have been at their highest since February, supported by macro factors, supply risks, and restocking.
Global Zinc Inventories Diverge, Muddying a Market Trend
A combination of market traders playing games and tightness in European supply has led to destocking across Asian LME warehouses for zinc, underpinning prices, with zinc’s forward curve posting a widening backwardation out to Dec-26.
Meanwhile, the domestic view on zinc in China is more muted, with plentiful inventory, increasing production on rising ore imports, and a weak outlook for zinc’s largest contruction market, property. As a result of this, investors’ interest in zinc has waned over 2025, with upside potential limited, with domestic participants focused on the reality of fundamentals
- Base Metals
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