Base metals are firmly positioned for continued strength, with bullish momentum expected to sustain across copper, zinc and aluminium in the medium term, according to a report by Motilal Oswal. The convergence of tightening inventories, electrification-led demand and supply disruptions across key producing nations supports a constructive outlook for the remainder of FY26.
The report highlighted that the long-term outlook for copper remains strongly bullish, supported by structural shifts in the global economy toward decarbonisation, electrification and digitalisation, along with persistent risks of disruption. Domestic copper is trading about 27 per cent higher year-to-date, triggered by the US announcing tariffs on copper imports, which sent shockwaves through global markets.
The report mentioned that rising EV sales and the growing use of copper in electrification, artificial intelligence and the global energy transition have also driven the surge in demand.
The electrification of transport and infrastructure continues to be a key driver of copper demand. Electric vehicles (EVs) require between 25 and 50 kilograms of copper per unit, compared to just 8 and 12 kilograms in conventional vehicles. The demand for EVs is expected to double to 2.2 million tonnes by 2030, compared to 1.2 million tonnes in 2025, the report noted.
Zinc prices on the London Metal Exchange (LME) rose above $3,000 per tonne in September 2025, posting a nearly 9 per cent rally year-to-date. The gains were supported by depleting inventories and a weaker US dollar. The report also stated that the expectations of Chinese production cuts further boosted sentiments, even though broader demand trends remained uneven.
Aluminium prices on the LME climbed to a six-month high above $2,700, largely driven by optimism following the US Federal Reserve’s 50-basis-point rate cut, which lifted overall commodity prices. The rally was also supported by China reaching its production cap of 45 million tonnes. LME aluminium inventories are now 50 per cent lower than the highs seen in June 2024, while inventories on the Shanghai Futures Exchange (SHFE) are about 53 per cent lower.
China’s aluminium imports surged 40 per cent year-on-year to 3,17,549 tonnes in 2025, supported by higher inflows from Russia, Indonesia and India. However, some concerns remain as China’s industrial production dipped to 5.2 per cent, and fixed asset investments rose only 0.5 per cent year-on-year, indicating lingering weakness in its economy.
The report added that while some optimism among metals may continue to support aluminium, a mix of fundamentals may keep prices hovering within a range in the near term.
