Most non-ferrous metal prices continue to rise but analysts say it is because of tight supply and disruptions rather than any strong economic factors.
European non-ferrous metal markets continued to face a challenging market environment at the time of writing. Geopolitical tensions in the Middle East, sanctions-related trade barriers and restrictions on international shipping resulted in changing trade flows and continued high levels of uncertainty.
Despite the market conditions, some observers expect individual metal markets to stabilise or experience a moderate recovery over the remainder of the year.
Analysts expect copper prices to continue rising in Q4 2026, while aluminium is expected to consolidate at a high level, driven by structural demand from the energy transition and tight primary supply.
On the LME, copper, zinc, nickel and tin were predominantly slightly to moderately higher, while aluminium and lead moved sideways. Zinc stood out as the relative outperformer.
Record high
The LME copper price on 17 August was at a record-high US$ 14 850 per tonne before dipping to US$ 14 535 on the 28th. It was in May the rate had exceeded US$ 14 000 for the first time. JP Morgan analysts expect copper prices to be back up to US$ 14 800 in the fourth quarter.
In the past, the metal was seen as a gauge on whether global economic activity was ramping up. But observers say the mixed global economic position means that may no longer be the case.
‘The underpinning story of elevated copper prices has been data centre and power grid demand to support the rapid AI industry expansion,’ William Osnato, director of commodity data research and analysis at Barchart told CNBC in early August.
Meanwhile, aluminium prices have been picking up after falling from a high of US$ 3 855 per tonne in June to little over US$ 3 000 at the start of June. On 11 August, the LME cash settlement was up to US$ 3 373 before dropping back.
US import surge
Prices continue to be supported by strong inflows into the US, as high premiums encourage shipments to the country and reduce availability elsewhere. The US could potentially draw additional metal away from international markets through new import tariffs.
The US decision on potential tariffs is the most important catalyst for the copper market in the second half of the year. Other influencing factors include limited mine production, sulphur shortages and robust industrial demand.
Pressure on recyclers
The price environment is putting considerable pressure on non-ferrous metal recyclers: working-capital requirements have increased massively; financing costs are rising; and credit insurance is becoming more expensive. At the same time, demand remains subdued and focused on short-term requirements.
Many market participants are pursuing a just-in-time strategy in view of high prices and uncertain end-user demand. The seasonal summer slowdown further reinforced this dynamic.
LME prices for non-ferrous metals also benefited at the end of August from the weaker US dollar, which was triggered by the announcement of an expanded bond buyback programme by the US Treasury.
Improved conditions in the currency and bond markets supported investor sentiment and provided tailwinds across the entire non-ferrous metals complex. Market participants are now focusing on US inflation data, which could give further indications of the Federal Reserve’s monetary policy direction and, consequently, the outlook for interest rates and the US dollar as key price drivers for non-ferrous metals.
China’s car switch
China’s car manufacturing sector is undergoing a significant rebalance with a slump in domestic sales and a surge in exports, according to Shen Dong of OmniSource Corporation in the US and a board member of BIR’s non-ferrous metals division.
‘Domestic auto sales data for the first five months of the year highlight a clear structural rebalancing towards electrification and globalisation amid sluggish home demand.’
Dong points out in BIR’s latest Mirror that overall vehicle sales by Chinese car makers have declined 4.2% year-on-year to just over 12.2 million units and retail numbers have dropped significantly in the domestic market, extending an eight-month run of year-on-year declines.
However, vehicle exports surged 68.7% year-on-year in May to 930 000 units to take the export share of total vehicle production to nearly 36%.
Meanwhile, the government is implementing its two-year plan to stabilise and drive the non-ferrous metalsindustry. The plan sets a target of raising China’s annual recycled non-ferrousmetal output to over 20 million tonnes and of achieving 5% average annual growth in the sector’s value-added output.
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