Written Commentary
BASE METALS
Aluminum: Aluminum fell 1.2% to $3,030. Aluminum’s nearby supply squeeze has intensified even as benchmark prices declined. The LME cash premium over the three-month contract reached $176.80 per ton overnight, its widest since November 1990. LME inventories have fallen nearly 56% since January to 226,350 tons, while available on-warrant stocks are almost entirely Russian-origin metal. Concentrated ownership is adding to the pressure: one entity holds 30%–39% of LME aluminum warrants. With November settlement approaching, short-position holders face the choice of delivering metal or rolling their positions, potentially contributing to volatility in nearby spreads. Tightness is also evident in China. Shanghai exchange inventories fell 31% last week to 132,605 tons, their lowest since December, while the November aluminum contract traded at a premium of approximately 350–355 yuan per ton over December.
Emirates Global Aluminum’s latest update pointed to a continuing but incomplete recovery from the March strike on its Al Taweelah complex. The alumina refinery is operating at approximately 70% of capacity, while the associated aluminum smelter has recovered to 61% of its roughly 1.5-million-ton annual capacity. Full smelter output is expected in the first quarter of 2027, with the refinery also capable of ramping up further as requirements increase. However, the full restart of the separate 185,000-ton-per-year recycling plant has been delayed from the end of 2026 to the second half of 2027.
Copper: LME copper fell 1.2% to $13,650; US prices are down 1.75% to $6.1805. Expectations for further US tightening and renewed weakness in technology shares weighed on sentiment. Prices earlier touched $13,609.50, their lowest since July 29, briefly moving below the 200-day moving average near $13,615 before recovering. The latest decline highlights copper’s sensitivity to both financial conditions and expectations for AI-related infrastructure spending. Higher US rates and dollar strength create a less supportive backdrop for commodity demand, while the technology selloff has encouraged investors to reassess the anticipated contribution from data-center construction. The 200-day moving average remains an immediate technical reference, although a brief move below it does not by itself establish a sustained breakdown.
Chinese supply tightness remains pronounced. The Yangshan import premium trades near a record $230 per ton, reflecting limited seaborne arrivals and reduced domestic smelter output. Separately, Bloomberg reported that Shanghai spot premiums had tripled over two weeks to 2,615 yuan per ton, while the SHFE December–January spread widened beyond 1,200 yuan, its largest backwardation since 2005. These are distinct measures, but collectively point to strong demand for immediately available metal. High Chinese premiums have reportedly made shipments from the US back to China economically viable on paper. However, the potential value of retaining metal in the US ahead of possible tariffs remains an obstacle. Greater clarity that tariffs will not proceed could encourage those flows.
Zinc: Zinc fell 1% to $3,720.
Tin: Tin declined 0.6% to $46,240.
Lead: Lead slipped 0.2% to $1,878.
Nickel: Nickel eased 0.1% to $16,190.
PRECIOUS METALS
Gold: December gold fell over 2% to $3,900 as yields rose and as the dollar traded near a 19-month high ahead of Friday’s PPI data. The root of golds weakness stems from increased expectations for further Fed tightening, which has outweighed relief from lower energy prices. Markets overwhelmingly expect a December rate increase, with roughly a 90% probability of a quarter-point move and a 10% probability of a half-point increase. Persistent inflation and hawkish Fed commentary have shifted attention toward the size and subsequent pace of tightening. Friday’s producer-price report is the next test of that outlook. A softer reading could temper expectations for more aggressive tightening, while further evidence of persistent price pressure would reinforce the interest-rate headwind.
Silver: December contracts are down 3.19% to $50.385.
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