Aluminium and copper prices have dropped by 17.5% and 6%, respectively, in the past month, but their downsides are limited from a fundamental perspective, according to analysts at BMI, ING Think, and Sunsirs.
Supply Deficits and Geopolitical Factors Underpin Aluminium
On the London Metal Exchange (LME), aluminium is currently quoted at around $3,100 per tonne, up 3% year-to-date. Research agency BMI, a unit of Fitch Solutions, noted that “the loss of Middle Eastern (West Asian) supply had tightened an already constrained (aluminium) market, and we expect a supply deficit to persist in 2026, limiting, in turn, the downside for prices, at least from a fundamentals perspective.”
ING Think’s Commodities Strategist Ewa Manthey echoed that view, stating: “We believe downside risks for aluminium prices remain limited. The market continues to face a supply deficit of 1.8 million tonnes (mt), while inventories continue to signal tight physical market conditions.” Sunsirs, a Chinese commodities data firm, said that “after a comprehensive assessment of the macro and industrial game, it is expected that the aluminium price may rise after fluctuating in the second half of the year, with limited downside.”
| Analyst | Aluminium View | Copper View |
|---|---|---|
| BMI | Supply deficit persists, limited downside | Tariff threat could cause short-term pressure but fundamentals intact |
| ING Think (Manthey) | Deficit of 1.8mt, tight inventories | Easing in Q3/Q4, tariff risk upside |
| Sunsirs | Rebound after pressure, limited downside | Prices expected to rise on tightening supply, stable demand |
The ceasefire agreement between the US and Iran is set to ease the acute supply-side pressure that had weighed most heavily on aluminium supply amid disruptions to Gulf smelting capacity, according to BMI. The US-Iran conflict is estimated to have removed 2.3 million tonnes from the market, equivalent to 3.2% of global output. “That said, the lost capacity is unlikely to return quickly,” BMI said. Manthey expects the global aluminium market to remain in a 1.8 million tonne deficit this year, noting that supply disruptions linked to the conflict have already removed an estimated 3 million tonnes of production from the market. “While the geopolitical backdrop has improved, the supply losses underpinning this outlook remain in place,” she said.
Copper: Demand Resilience and Tariff Uncertainty
Copper is currently quoted at $13,300 per tonne on the LME, up 7.5% year-to-date. ING Think’s Manthey sees copper easing in the third and fourth quarters modestly, as the initial US tariff stockpiling impulse fades and macro headwinds persist. She noted that while a US announcement on tariffs would be a near-term upside risk to ING Think’s forecast, Washington did not come out with any tariffs on June 30 as expected.
BMI said even if US President Donald Trump imposes tariffs again on copper, sentiment-driven short-term downward pressures would likely ensue. “However, the outcome does not materially alter our outlook, leaving copper’s longer-term supportive fundamentals intact, all else being equal,” it said.
Sunsirs reported that a rapid reduction in Chinese stocks demonstrates that copper demand has strong resilience, and price adjustments often trigger collective restocking behaviour from the downstream sector. “Looking at the copper price trend for the second half of the year, with the basic support of tightening supply and stable demand, the copper price is expected to continue to rise. However, uncertainties in the macro and policy aspects will affect the pace of price movement,” Sunsirs said.
Manthey added that a 15% phased US tariff on copper from January 1, 2027, would likely increase the COMEX premium over the LME. Both benchmarks, however, would move higher. “The overall impact would be supportive for copper prices globally, although the larger move would likely occur in COMEX,” she said. BMI noted that though the Comex-LME copper spread is “re-widening”, it is nowhere near the levels seen earlier.
For commodity traders and procurement teams, the key takeaway is that aluminium and copper prices face a limited downside due to persistent supply deficits and geopolitical disruptions, while demand from China remains resilient. Upcoming data releases on US tariffs and Chinese manufacturing activity will be closely watched.
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