Early morning trading in the nonferrous metals market on May 19th saw a strong rebound, driven by easing macro sentiment and significant supply-side constraints, with aluminum prices leading a particularly resilient charge. Overnight, a retreat in geopolitical risk premiums and a drop in U.S. oil prices below the $100 per barrel mark helped alleviate extreme inflation fears. Concurrently, China's better-than-expected industrial data and a weakening U.S. dollar index combined to prompt a reassessment of the fundamental value of commodities, ushering in a corrective rally for the nonferrous sector overall.
Aluminum Surge: Supply "Achilles' Heel" Ignites Structural Bull Market The aluminum market is experiencing its most bullish structural logic in half a century. Citi's latest warning highlights that turmoil in the Middle East has resulted in the loss of over 3 million tonnes of supply. With global spare capacity virtually zero and inventories at a 55-year low, the aluminum market is facing its most severe structural shortage in over 50 years. Although China's traditional peak season is nearing its end, resilient consumption from the new energy vehicle, AI computing, and energy storage sectors, coupled with rising aluminum product exports, provides solid support for higher prices. Aluminum prices are expected to remain strong today, driven by overseas supply tightness.
Copper and Gold: Macro Easing Unleashes Financial Attributes Acting as the sector's anchor, copper and gold were the first to signal a rebound amid improving macro conditions. The tightness in copper concentrate supply continues to intensify, with spot treatment charges for domestic copper concentrate stuck deep in negative territory. While inventory structures are mixed, solid physical demand on price dips provides strong support. In the medium term, global copper consumption is expected to be sustained by AI data centers, power grid investments, and the new energy sector. Combined with potential stockpiling expectations in the U.S., copper's fundamentals remain positive overall, with prices expected to continue trading in a high range.
Gold benefits directly from the decline in the U.S. dollar index and a recovery in safe-haven sentiment. As macro headwinds show marginal improvement, gold's financial and safe-haven attributes are regaining recognition from capital. After repeated fluctuations at high levels, gold prices are poised for a new round of valuation recovery.
Zinc, Lead, Nickel, Tin: The Battle Between Strong Expectations and Weak Reality The price movements of zinc, lead, nickel, and tin primarily reflect a fierce contest between "strong expectations" and "weak reality." Tight supply of zinc concentrate and declining treatment charges are eroding smelter profits. Coupled with scheduled maintenance in May and unplanned production cuts at some smelters, downside for zinc prices is limited. However, weak demand from China's infrastructure and property sectors, along with high prices suppressing consumption, is expected to keep SHFE zinc trading in a high range.
The lead market is charting its own course, supported by a sudden contraction in domestic secondary lead supply and tight raw material supply on both fronts. However, sluggish off-season consumption caps its upside potential. Futures prices are adjusting weakly, while spot lead prices remain stable.
The supply-demand dynamics in the nickel industry chain are diverging. Tighter nickel ore quotas in Indonesia and production cuts at hydrometallurgical plants provide cost support, but the off-season for downstream stainless steel consumption limits gains. Prices are expected to consolidate within a range in the short term.
The tin market has recently performed strongly, becoming a focus for contrarian capital inflows. Driven by explosive demand from AI servers, advanced packaging, and other sectors, coupled with supply constraints from slower-than-expected resumption in Myanmar and tighter Indonesian quotas reducing primary ore supply, tin prices have surged against the trend. Capital is flowing into this "small but beautiful" category with strong supply barriers. Short-term cost support for tin prices remains solid, maintaining a high-range consolidation pattern.
Outlook: Focus on Macro Factors and Inventory Inflection Points In the short term, key focuses include macro factors such as speeches from Federal Reserve officials and initial jobless claims data. A cooling labor market would further strengthen expectations for interest rate cuts, providing upward momentum for metal prices. Simultaneously, close attention must be paid to changes in Indonesia's mining policies and subsequent developments in Middle East geopolitics. It remains crucial to monitor the actual restocking pace of domestic downstream sectors following price rebounds and the marginal inhibitory effect of high prices on end consumption, while remaining vigilant about the risk of sharp rallies followed by pullbacks due to volatile macro sentiment.
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