Copper and zinc buyers are locked in a fight to the bottom for concentrates, nickel is the second-best stocked metal on the London Metal Exchange, and tin has held above $50,000 per tonne since June, as the base metals market gathers in London for LME Week from Monday October 19.
Record high LME copper prices, record-low TCs set stage for 2027 talks
Copper enters LME Week with prices close to record highs and spot concentrates terms at levels few participants thought possible at the start of the year. LME three-month copper set successive record highs in 2026, peaking intraday at $14,875 per tonne on September 10, as the prospect of US Section 232 tariffs on refined copper pulled metal into the US, drained LME stocks and pushed nearby spreads into steep backwardation over the summer.
In the raw materials market, Fastmarkets’ copper concentrates TC index, cif Asia Pacific fell by 290.53% to $(272.20) per tonne on October 9 from $(69.70) per tonne at the start of the year.
Sulfuric acid prices, lifted by the closure of the Strait of Hormuz and China’s acid export ban, initially allowed smelters to absorb deeper negative charges. TCs have since appeared to decouple from weaker domestic acid prices in China as new smelting capacity competes for units.
Mine disruptions fueled tight concentrate supply, with Chile at the center. Global copper mine production fell by 1% year on year in January-July. Chilean output was down by 7%. Severe storms in July and August disrupted operations in central and north-central Chile, leading Antofagasta Minerals and Lundin Mining to cut 2026 guidance for Los Pelambres and Caserones.
Safety incidents have also mounted. Escondida suspended all operations after a fatal accident on September 23, and a contractor died at Codelco’s Radomiro Tomic on October 1. On October 11, an avalanche killed two contract workers in El Teniente’s open pit; the company had suspended its Andes Norte expansion at El Teniente in August after studies identified a new deep seismic risk, and two unions at Antofagasta’s Centinela began a strike on October 7.
Outside Chile, Kamoa-Kakula and Grasberg have yet to return to full rates. In Panama, a government commission recommended on September 30 that talks begin with First Quantum on restarting Cobre Panama to fund an orderly closure.
Some supply has returned. Mongolian concentrate output rose by about 18% in January-July on Rio Tinto’s Oyu Tolgoi underground ramp-up, and Peruvian mine production rose by 2.2%, mainly on higher output at Antamina, the International Copper Study Group (ICSG) said.
Smelters were also in focus. In China, new capacity added to competition for concentrates: world smelter production rose by 5.9% year on year in January-July, the ICSG said. Two new Chinese smelters, each with 300,000 tonnes per year of refined copper capacity, would require about 1.2 million tonnes of concentrates, a mining source said in September, with Xiamen C&D’s new smelter and Humon’s expansion among the projects.
Large Chinese smelters proposed production cuts at the CSPT meeting in September, though no concrete plans have been heard. In Japan, Mitsubishi Materials said in March it would stop processing concentrates at its Onahama plant by the end of March 2027.
In Zambia, Konkola Copper Mines restarted its Nchanga smelter on September 21 after a 106-day maintenance shutdown. In Indonesia, PT Freeport Indonesia’s smelter restarted in late August after the Grasberg disruption cut its feed.
The gap between smelter and trader buying levels has also widened, with the counterparty spread at $68.50 per tonne on October 2 compared with $51 per tonne in early January.
Antofagasta’s mid-year supplies were linked to spot indices for the first time, while the China Smelters Purchase Team (CSPT) has called for fixed TC/RC buying and production cuts.
With the 2026 annual benchmark at $0 per tonne and 0 cents per lb, discussions during LME Week are expected to turn to contract terms for 2027.
Further downstream, US tariff uncertainty remained a major driver of copper cathode trade flows in 2026. While refined copper cathodes remain exempt from tariffs, the possibility of future tariffs continued to support a premium for COMEX copper over LME prices and periodically reopened the arbitrage for moving cathode into the US.
Market participants are uncertain whether the US administration will extend tariffs to refined copper.
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Zinc TCs key market barometer for 2027
Zinc concentrates TCs have repeatedly fallen to record lows in 2026 amid tight supply and increased focus on by-product payables, which has squeezed zinc smelters economics and put next year’s benchmark negotiations firmly in focus during LME Week.
“The zinc market has been in uncharted territory this year. With no clear baseline, traders have been buying at increasingly aggressive TC levels just to secure units for their buyers,” a South American trader said.
Fastmarkets’ twice-monthly assessment of the zinc spot concentrate treatment charge, CIF China is in deep negative territory, falling to a new record low of $(115)-(150) per tonne on Friday October 9.
The pace of any recovery in TC levels will hinge on how quickly mine supply grows in 2027 and to what extent winter smelter cuts in northern China ease demand, while high by-product values, particularly for copper, silver and minor metals could maintain pressure on TCs and support a benchmark more favourable to miners, sources told Fastmarkets.
El Niño-related supply disruptions, expected to peak between November to February 2027, also remains a key concern for the zinc concentrate market. Sources told Fastmarkets that prolonged flooding and road closures could disrupt concentrate shipments and, more significantly, restrict essential supplies of diesel, chemicals and other essential inputs to mines, potentially forcing some sites to reduce utilisation rates or halt production.
Elsewhere in the zinc market, Trafigura-owned Nyrstar launched a strategic review of its 300,000 tpy Budel smelter on September 24, with a conclusion expected before the end of 2026. Market participants viewed low TCs as the more significant challenge to Budel’s economics, which is compounded by high domestic electricity costs.
The impact of any Budel closure on the European spot market could be partially offset by Boliden’s expansion of its Odda smelter to 350,000 tpy, expected in the fourth quarter of 2026.
Boliden is also expected to remain firmly in focus during LME Week, with market participants looking for further insights into the outcomes of its acquisition of a majority stake in Nexa Resources.
“It’s the Western Hemisphere zinc market’s equivalent of the Anglo-Teck merger,” a European producer said.
The Fastmarkets’ zinc SHG min 99.995% ingot premium, dp fca Rotterdam increased to $330 per tonne on October 13, from $217.50 per tonne at the beginning of March.
Nickel cushion absorbs threats on supply
The nickel market finds itself wading through a haze entering LME Week. A conflict of narratives, difficult to weigh, is making nickel a less attractive investment than some of its AI-friendly base metal companions.
Class 1 nickel, in essence, is oversupplied. Years of full throttle production in Indonesia has built up vast reserves which is reflected on the LME and the Shanghai Futures Exchange. On both exchanges nickel is the second-best stocked metal.
Such is the supply cushion that even significant compromises to future production have failed to provide a sustained increase in the price of LME futures.
One of the threats to production is the ongoing blockade of the Strait of Hormuz, which has caused a surge in the price of sulfur; Indonesia is heavily reliant sulfur imports for its High Pressure Acid Leaching (HPAL) refining process.
According to Global Trade Tracker, the price of imported sulfur into Indonesia was $1,235 per tonne in August, more than twice its cost in the first quarter, of around $550 per tonne.
Still, producers do not appear at all averse to HPAL with a large PT Vale HPAL project under construction in Indonesia and other projects ramping up in the region.
The second potential price driver is the restriction of mining quotas in Indonesia. Announcements and gossip have caused price rallies this year, but the restrictions have not been clear cut with negotiations between the mining ministry and miners on a case by case basis.
For example, Weda Bay went into care and maintenance after fulfilling its mining quota, but has since restarted, indicating it may have received further allowances. Thus, regulation in Indonesia does not seem the threat it was.
“The market is well aware that some quota revisions have been given and that has had an impact on the LME price,” Fastmarkets analyst Olivier Masson said. “But, the fact that the Indonesian government has not made any clear announcements leaves that little bit of uncertainty.”
Other sources of nickel ore are also being utilized — Indonesia’s nickel ore imports from the Philippines have surged by 82% year on year in the first seven months as Indonesian smelters have sought additional feeds.
LME futures remain low despite the recent occurrence of an El Niño-driven drought on Sulawesi, which has impacted the ramp up of a Nickel Industries’ Excelsior HPAL project and is also stifling ferro-nickel and nickel pig iron projects at Morowali Industrial Park. The market will keep a keen eye on developments and the duration of disruption.
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European aluminium under pressure from growing supplies
Participants in Europe’s primary aluminium market will be monitoring the anticipated increase in deliveries from destinations in Asia such as Indonesia and India and the impact this will have on European premiums, primarily in the duty-unpaid market.
Producers in the Middle East are also expected to continue to ramp up production at facilities following damage inflicted during the US-Iran war. Shipments of this metal into Europe would likely keep pressure on premiums in the duty-unpaid market and act as a natural cap to duty-paid premiums, traders said.
“Producers in the Middle East are flushing out big stocks,” a trader said.
“There’s an unpaid armada on its way,” another trader said.
According to a Fastmarkets analysis, production from Gulf Cooperation Council (GCC) nations, including Qatar, Saudi Arabia and the United Arab Emirates, will be 75-80% of pre-war levels by the first quarter of 2027. Emirates Global Aluminium (EGA) is expected to restart its Al Taweelah smelter early next year.
The EGA ramp-up was a “monumental” development, given the pace at which the producer was targeting a return to full production, according to Fastmarkets analyst Andy Farida.
“[At first], it sounded too optimistic with their timeline, but the faster ramp up intends to bring back production while alternative supply routes are being established,” Farida added.
Meanwhile, the ongoing Canada-US tariff dispute continues to fuel uncertainty — and support premiums — in Europe’s duty-paid market as producers eye the most attractive arbitrage opportunities for Canadian tonnes.
Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $550-585 per tonne on October 13.
Elsewhere, the Australian alumina market has been adjusting to a changing supply and demand dynamic amid new and recovering sources of smelter feedstock consumption.
In 2025, the market was shaped by surplus from new Indonesian refineries but now that the country has moved to capture downstream production, 2026 has already demonstrated a tighter fundamental environment.
Indonesian demand has helped partially offset displaced trade-flows caused from the GCC blockade and stockpiling activities in China leaving their domestic market in surplus, enabling the raw material to trade at elevated levels above $350 per tonne.
Fastmarkets’ daily assessment of the alumina index, fob Australia, stood at $367.96 per tonne on Friday, up from $351.53 per tonne the month prior.
The market is also watchful for the Chinese arbitrage window, which could give China the opportunity to offset tightness if the market flips to a deficit.
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LME tin rally tests physical market
LME three-month tin has traded above $50,000 per tonne since June 23 and outperformed the wider base-metals complex in 2027 amid tight global supply, low inventories and growing AI-linked demand for tin soldering.
“AI provides a compelling long-term demand story for tin, but the near-term test is whether that demand translates into stronger physical buying. The crucial distinction on supply is between a mine restarting and reliable metal reaching consumers,” Fastmarkets analyst Rory Deng said.
The rally has also filtered through to the physical market, increasing the cost of securing tin outside Asia.
Elevated LME prices have raised financing costs, while Middle East conflict-related freight disruption has helped keep European premiums high, despite limited change in underlying fundamentals.
The conflict has also reshaped Europe’s import landscape, driving greater interest in South American material. But Asia remains central to global tin supply, with the pace of Myanmar’s recovery at Man Maw a key factor for future availability.
“How quickly Myanmar restores sustained shipments, alongside the resilience of supply from the DRC [Democratic Republic of Congo] and Indonesia, will help determine whether improving availability can keep pace with demand,” Deng added.
Several outcomes are still pending: Nyrstar’s decision on Budel, the pace of EGA’s restart at Al Taweelah, Myanmar’s recovery at Man Maw and any concrete production cuts from Chinese copper smelters.
Beyond the negotiating tables, the market will stay alert to disruption risks over the coming months. These include El Niño-related weather, which is expected to peak between November and February, Indonesia’s handling of nickel ore quotas, and how long the Strait of Hormuz closure continues to weigh on sulphur, acid and freight costs.
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