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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: 

  • Metals Debate & Market Sentiment
    • Summarized poll results before and after the metals debate, noting copper was initially the favorite, but tin gained ground post-debate due to bullish arguments about its price potential. Highlighted Tom from Citi’s bullish targets for copper and tin.
    • Discussed the introduction of green premiums for nickel by the Hong Kong exchange and plans to expand to copper and aluminium, aiming to replicate price reporting agency models.
    • Emphasized the growing importance of smelting over mining, referencing comments from Trafigura and a rare joint statement from Japan, Spain, and South Korea about unsustainable conditions for smelters and miners, especially with TCs at zero for copper.
    • Noted gold as a universal safe haven for the coming year, with most scenarios supporting its favorability.

 

  • Macro Outlook & Key Dates
    • Outlined several critical upcoming dates: China’s 4th plenum and its implications for the 15th 5-year plan, the APEC meeting between Trump and President Xi, potential US Supreme Court rulings on tariffs, and leadership changes at the Federal Reserve.
    • Provided scenarios for each event, discussing possible market reactions, risks of underwhelming stimulus from China, tariff extensions or increases, and the impact of US political developments on the dollar and safe haven demand.
    • Stressed the high level of uncertainty and the importance of monitoring these events for price direction.

 

  • Metal-Specific Commentary
    • Copper: Presented a balanced view, comparing bullish (Citi), bearish (Goldman), and neutral (Trafigura) outlooks. Noted supply risks, surplus/deficit debates, and the impact of tariffs on US inventories. Expressed a personal view aligning more with Goldman, expecting elevated but possibly overvalued prices, with a trading range of 8,500–11,500.

 

    • Aluminium: Highlighted the divide over Indonesia’s ability to fill the supply gap as China hits its capacity ceiling. Outlined bearish (Goldman) and bullish (Citi, Trafigura, Harbour) arguments, with demand and supply uncertainties, and mentioned the impact of CBAM and fund flows into hard assets.

 

    • Zinc: Addressed the ongoing market squeeze, low stocks, and China’s reluctance to release material to the LME, possibly due to US trade investigations. Noted real-world tightness is not demand-driven but due to regional distortions.

 

  • Macro Risks & Global Developments
    • Commented on mixed macro sentiment, US government shutdown, trade tensions, and geopolitical risks, including US-China relations, Ukraine, and Russian assets.
    • Mentioned loan fraud at US regional banks and global debt concerns, reinforcing the need for safe havens.
    • Noted Japan’s new pro-stimulus president as a positive for future metal-intensive spending.

 

  • China Economic Data & Outlook
    • Provided a detailed review of China’s September economic data: GDP slightly above expectations, but growth is uneven with weak retail sales, declining fixed asset investment, and deflationary concerns.
    • Highlighted China’s record trade surplus, increased exports to India, Africa, and Southeast Asia, and the risk of more countries imposing tariffs.
    • Concluded that markets are waiting for further policy and stimulus signals from China.

 

  • Upcoming Data & Market Focus
    • Noted a light week for economic data, with US CPI and European PMI as main releases. Expected the Fed to have a green light for a rate cut, and ECB likely done with its rate-cutting cycle.
    • Emphasized that geopolitical risks are taking center stage in market sentiment.
  • Base Metals

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