Non-Ferrous Metals Split: Copper Bulls Take a Breath, Aluminum Holds Steady

The non-ferrous metals complex has been sending mixed signals over the past week. After a strong run fueled by commodity trading advisor buying in late May, the market hit a pause button on June 5. CTAs began trimming their elevated exposure to base metals, with selling concentrated in Shanghai-listed contracts.

Here is what the numbers looked like. Comex copper went from 100 percent long to 91 percent. LME copper dropped from 91 percent to 82 percent long. SHFE copper followed the same path, also down to 82 percent. But the bigger moves showed up in other metals. SHFE nickel positioning fell from 45 percent long to just 27 percent. SHFE lead actually flipped from 55 percent short to 64 percent short. LME aluminum got cut from fully long at 100 percent down to 82 percent .

A trader I spoke with in London said the market is trying to figure out which direction to go. The copper rally earlier this year was impressive. Comex copper hit a fresh record high just this week. But now people are taking some chips off the table.

The pullback on June 5 came right after some major industry gatherings. The SMM London H1 Seminar wrapped up on April 29, bringing together over 160 registered participants from across the global non-ferrous metals supply chain . The message from that event was clear. Copper is facing real supply constraints, and the market could fall into deficit from 2027 through 2030.

Dr. Yanchen Wang from SMM laid out the numbers. Global economic uncertainty has intensified. The IMF cut its GDP growth forecast. But China’s exports may serve as a key pillar for the economy in 2026. Power sector investment in China increased significantly in the first two months of the year, and the State Grid Corporation plans to ramp up spending during the 15th Five-Year Plan period .

The aluminum market has its own story. Chinese smelters are seeing better profitability and higher operating rates. Outside China, SMM estimates Indonesia could bring roughly 950,000 metric tons of new aluminum smelting capacity online in 2026 . That is a lot of new supply. But the market is already responding. LME aluminum stocks fell 0.89 percent in a single day to 324,825 tons on June 11, one of the biggest draws among the major non-ferrous metals .

Nickel is a different beast entirely. The Indonesian government has been tightening mining quotas. SMM estimates this year’s RKAB supplementary quotas at roughly 15 to 20 percent. With limited new projects coming online elsewhere, nickel imports from the Philippines are expected to stay around 19 million metric tons. The market is expected to maintain a tight balance .

UBS just put out fresh forecasts that back up this picture. The bank raised its copper and aluminum targets by about 3 to 5 percent for 2025 and 2026. But nickel got cut. UBS now expects nickel at $7.25 per pound in 2026 and $7.50 in 2027, down from previous estimates of $7.50 and $8.00 . The bank’s analysts said the phase of maximum uncertainty and instability created by tariffs is behind us. But they still see non-ferrous metals as a space where physical market constraints matter more than macro headlines.

The United States added another layer of complexity this week. May CPI came in at 4.2 percent, broadly in line with expectations. But base metals still took a hit. LME zinc fell more than 2 percent overnight. LME copper dropped 0.81 percent. LME aluminum fell 1.09 percent. Even gold got hammered, down 4.49 percent .

Citi reacted by lowering its three-month gold target from $4,300 per ounce to $4,000. The bank warned that if Strait of Hormuz disruptions persist through summer, global gold demand could contract further .

The zinc market is dealing with its own set of pressures. According to SMM analyst Yueang He, global zinc concentrate supply will maintain a tight balance in 2026. European smelting could see selective minor production cuts of 60,000 to 100,000 metric tons due to electricity price swings. China’s zinc concentrate production is estimated up 4.8 percent year-on-year to 3.95 million metric tons. But the refined zinc market shows a surplus in China and a deficit outside China .

Lead is a longer-term story. Global lead mine supply is gradually recovering, but the concentrate market remains tight. Treatment charges are unlikely to rebound significantly anytime soon. SMM estimates the loose supply situation in the global refined lead market will persist until 2028. Battery demand in China remains slightly soft, which limits the upside for lead prices .

Tungsten has been the surprise performer in the non-ferrous metals space. Prices have shot up dramatically. In mid-June, major Chinese tungsten producers raised their purchase prices for tungsten concentrate by more than 25 percent compared to the second half of May. Ammonium paratungstate prices jumped 18 percent . The driver is tungsten hexafluoride, a critical electronic specialty gas for semiconductor manufacturing. Global supply of that material is falling short of demand, pushing upstream tungsten prices higher.

The broader theme across non-ferrous metals is fragmentation. The panelists at the SMM London seminar spent a lot of time on this. The guests agreed that there is no universally applicable, low-risk cross-market arbitrage strategy in the current market . Logic across different sub-markets has diverged. Some trades that worked for years simply do not work anymore.

Morgan Stanley’s Amy Gower said since the second half of last year, her firm has held a structurally bullish view on aluminum fundamentals. China’s aluminum capacity is approaching its ceiling. The bullish logic for the industry is concentrated in the second half of this year. Supply-side tightening has gradually materialized, but it has not been fully reflected in futures prices. Instead, it is showing up in strengthening spot premiums. Year-to-date, three-month aluminum has risen 18 percent. European spot premiums are at 27 percent .

What does this mean for non-ferrous metals buyers and sellers? A few things stand out.

First, regional differences matter more than ever. The Shanghai market and the Western exchanges are telling different stories. CTA positioning on SHFE is less extended than on LME and Comex for most contracts. That gap could create opportunities for people who understand both markets.

Second, supply constraints are real but uneven. Copper concentrate is tight. Aluminum has a capacity ceiling in China. Nickel is dealing with Indonesian quota issues. Zinc and lead are closer to balance. Each non-ferrous metal requires its own playbook.

Third, the macro backdrop is shifting. US rate cuts, a weaker dollar, and Chinese stimulus could all support demand. But inflation risks and potential Fed rate hikes are still on the table.

The non-ferrous metals market is not crashing. But it is becoming more complicated. The days of all metals moving together are over for now.