LME Week 2026 kicked off in London on Monday, with industry leaders focused on the macroeconomic outlook for base metals, AI and energy transition demand, as well as critical mineral supply chain resilience. This year’s discussions have come at a time when the London Metal Exchange is robustly healthy, recording a 16% year-on-year increase in average daily turnover from January through September.
Standard Chartered’s commodity analysts expect mixed results for base metals in the coming months. Prices will follow macroeconomic conditions (risk appetite, Fed rate policy, U.S. dollar moves and China’s economic activity), geopolitics, U.S. copper tariff uncertainty and supply.
The analysts said uncertainty over metal-specific tariffs continues to cause price volatility, premium swings and inventory dislocations. Supply issues remain important drivers as well: output disruptions, mining quotas, smelter power contracts, sulphur tightness and wage renegotiations.
Standard Chartered’s near- and mid-term projections for each base metal follow.
#1. Copper
Stanchart expect prices to remain at elevated levels for the rest of 2026, buoyed by supply stresses and US copper tariff uncertainty which remains the key event risk.
The analysts have upgraded their average copper price forecast to $13,674 per ton in 2026 and $13,210 per ton in 2027, up from previous projections of $13,472/t in 2026 and $12,875/t in 2027.
Copper prices are up 16% YTD, having set a series of all-time highs throughout the year. Meanwhile, the nearby LME spread has been mostly in backwardation since July, with only a brief move to contango in mid-September. In addition to copper-specific factors–including uncertainty over the pending U.S. tariff review, physical inventory dislocations and supply challenges–prices have been driven by macro dynamics such as risk sentiment, USD moves and Fed policy expectations.
Beyond macro drivers, Stanchart sees two key dynamics supporting elevated copper prices in near-term. The first is continued uncertainty over the U.S. copper tariff review, with the Trump administration yet to provide an update on whether refined copper imports–which have been exempt so far–will become subject to tariffs.
The second is supply, and Stanchart sees it intensifying. Upside risks to copper prices include further tightening of ex-U.S. inventories and optimism over AI demand. Downside risks include downgrades to global growth expectations, weaker risk appetite, geopolitical developments, further U.S. dollar strength and hawkish Fed policy.
Stanchart notes that the premium of Comex over LME copper has narrowed. The physical dislocation in exchange inventories continues. Comex inventories reached a fresh record high of 790.4kt, partly because of persistent U.S. copper tariff uncertainty. The pace of builds has picked up since mid-September, when inventories showed intermittent daily declines and modest builds.
LME copper inventories have continued to decline in October, as have cancelled warrants. On-warrant inventories rose to 140kt, their highest in a month. SHFE inventories remain low overall. Strong spot demand from China shows in the Yangshan copper import premium, which has risen to $137/t, its highest since November 2022.
Chile’s copper-mine output fell 12.8% Y/Y in August to its lowest monthly level since February 2011. Output is down 7.8% Y/Y in the year to date, and Stanchart projects that Chile’s 2026 copper production will decline by slightly more than 5% Y/Y before rebounding in 2027.
Labour tensions have risen in Chile as wage renegotiations proceed. A strike has been averted at the Escondida mine, the world’s largest. A strike at the Centinela mine has ended after mediation talks led to the acceptance of a renegotiated wage offer.
#2. Aluminium
In contrast, Stanchart has lowered its aluminum price forecasts to reflect better supply prospects driven by a faster-than-expected recovery of Middle East supply, the ramp-up in Indonesian output, robust China smelter production and Europe restarts. The analysts now expect prices to average $3,249/t in 2026 ($3,318/t previously) and $3,001/t in 2027 ($3,199/t previously).
Aluminium prices have erased the entire Middle East supply risk premium. They posted their first sub-$3,000/t closes of 2026 on Oct. 14-15 before moving back above that level the next trading day, and the drop to recent lows returned prices to their pre-conflict levels.
Full resumption of GCC supply remains uncertain. The Strait of Hormuz is still disrupted, freight costs are higher and alternate routes face logistical problems.
Prices fell on three developments that have eased concerns, for now, about the loss of GCC units: strong production growth in China and Indonesia, robust Chinese exports of semi-finished aluminium products (semis), and restarts at European smelters.
China’s production has been rising on record margins, with operating utilization rates running at an all-time high at 98.5%. Data from China’s National Bureau of Statistics (NBS) shows domestic output at 3.98 million tonnes (Mt) in August, with YTD output hitting 31.1Mt, up 3.9%Y/Y. China’s aluminium smelters have been maximizing output on high margins, moving above the official capacity cap of 45 Mt. Further, as China imposes a 30% export tax on primary exports, the surge in aluminium exports this year has been driven by aluminium semis exports. China customs data for September shows that unwrought aluminium and semis exports rose 25.9%Y/Y to 656 kt, a three-month high. Meanwhile, exports are up 17.8%Y/Y to 5.32 Mt.
LME aluminium prices have fallen markedly from their March highs, and the signals from time spreads and regional premiums are mixed. The nearby LME spread held in sustained backwardation from March to June. Since then, it has been volatile, flipping between modest backwardation and contango. Regional aluminium physical premiums have eased from all-time and multi-year highs and remain elevated.
#3. Zinc
Stanchart has raised its zinc price forecasts to an annual average of $3,555/t in 2026, up from $3,437/t, and $3,476/t in 2027, up from $3,218/t.
Zinc prices have come down from levels above $4,100/t reached in September. Stanchart projects that supply underperformance will buffer the downside, with a tight zinc concentrate market and constrained smelter supply.
The nearby LME zinc spread has been in sustained backwardation since June, and the backwardation has narrowed markedly from its Q3 highs. LME inventories have risen throughout 2026 and are up almost 50% from the start of the year. They remain low overall by historical standards.
China’s refined zinc production growth has stayed robust in 2026, with mine and smelter disruptions and curtailments hitting other regions. Growth has slowed: the latest NBS data shows 3.8% YTD, down from 5.1% in H1 and 8.1% in 2025.
Stanchart expects a softer price profile in 2027 with a modest rise in zinc mine output. It says the market is likely to remain vulnerable to further supply-side disruptions, which would keep prices elevated.
#4. Nickel
Stanchart has tweaked its annual average nickel price forecasts modestly lower for the rest of 2026 and 2027 to $17,055/t (previously $17,256/t) and $16,563/t (previously $16,719/t) respectively.
After hitting their YTD highs over $19,000/t in April, nickel prices have trended lower and closed at $15,221/t in mid-October, to post their weakest close of the year so far. LME nickel inventories have been building and supply prospects from High-Pressure Acid Leach (HPAL) projects look promising while demand from key sectors (stainless steel and batteries) has been soft. According to Stanchart, prices are likely to take their primary cues from Indonesia’s nickel policy, specifically the country’s government’s nickel mining quota (RKAB) for 2027, changes to which have caused prices to have see-saw in line with expectations of and with moves in the RKAB quota.
By Alex Kimani for Oilprice.com
