DBT Bureau
Pune, 2 Sep 2026
Copper settled lower by 1.24% at ₹1,372.4 as a stronger U.S. dollar, renewed Middle East tensions and a global bond selloff weighed on industrial metals. Hawkish comments from U.S. Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium added further pressure, as he indicated that the Fed may need to raise interest rates if inflation remains above target, raising concerns over borrowing costs, economic growth and metals demand. Supply-side developments provided some support, with total copper stocks in SHFE-monitored warehouses declining more than 19% last week, while on-warrant stocks stood at 31,462 tonnes. Chilean copper production fell 9.4% year-on-year in July to 403,424 tonnes from 445,322 tonnes, mainly due to severe weather disruptions in northern mining regions and maintenance at major operations. Speculators reduced their net long positions in COMEX copper by 2,780 contracts to 76,446 contracts, indicating some moderation in bullish positioning. The global refined copper market moved into a 60,000-tonne deficit in June from a 15,000-tonne surplus in May, according to the International Copper Study Group, although the market still recorded a 131,000-tonne surplus during the first six months of the year. June refined copper production stood at 2.37 million tonnes, while consumption reached 2.43 million tonnes. China’s unwrought copper and copper product imports declined 11.5% year-on-year to 425,000 tonnes in July, while January-July imports fell 6.2% to 2.92 million tonnes. Copper ore and concentrate imports also declined, while Chinese refined copper production increased 1.3% year-on-year to 1.29 million tonnes in July. Technically, the market is under long liquidation, with open interest declining 4.26% to 10,979 contracts while prices fell ₹17.3. Copper is finding support at ₹1,362.4, and a break below this level could expose ₹1,352.5. On the upside, resistance is placed at ₹1,389.1, while a sustained move above this level could push prices toward ₹1,405.9.
Market Analysis:
- Copper prices dropped amid a stronger dollar and a global bond selloff
- UBS sees copper market deficit to widen to 379,000 metric tons in 2027, from 219,000 metric tons in 2026
- UBS retains constructive view on copper, expects prices to reach its target of $15,500/mt for coming quarters
Zinc settled marginally lower by 0.23% at ₹416.45 as profit booking emerged after a strong recent rally supported by supply concerns and limited availability outside China. Falling refined zinc inventories, tight concentrate supply and speculative buying have strengthened the market, with August marking the strongest monthly performance since January on both the LME and SHFE. Available LME zinc inventories declined 28% in less than a week to 68,250 tonnes, their lowest level since December 2025, highlighting tightening overseas availability. Zinc concentrate treatment charges have turned sharply negative as refiners face severe raw material shortages, while bullish speculative positions on the LME reached their highest level since the second quarter of 2022. Supply concerns were reinforced by lower production from major producers, including Glencore, Boliden and MMG. Glencore reported own-sourced zinc production of 365,600 tonnes in the first half of 2026, down 21% year-on-year, although it maintained its full-year guidance of 700,000–740,000 tonnes. Boliden’s zinc concentrate production declined 16.8% quarter-on-quarter to 74,200 tonnes, while MMG produced 106,000 tonnes in the first half and retained its annual guidance of 215,000–235,000 tonnes. Nexa produced 79.3 thousand tonnes in the second quarter, up 8% year-on-year, supported by higher ore grades, while Minmetals Resources produced 105,800 tonnes and maintained its full-year guidance. The global refined zinc market shifted into a 31,400-tonne deficit in June from a 22,400-tonne surplus in May, although the first-half market still recorded a 120,000-tonne surplus. China’s refined zinc output reached 641,000 tonnes in May, up 10% year-on-year, reflecting strong smelter operations. However, elevated prices are weakening demand and discouraging buyers in China, limiting further upside. Technically, the market is under long liquidation, with open interest declining 2.06% to 2,621 contracts while prices fell ₹0.95. Zinc has support at ₹412.8, and a break below could test ₹409.2. Resistance is placed at ₹421, while a sustained move above could push prices toward ₹425.6.
Market Analysis:
- Zinc dropped on profit booking after prices gained supported by supply concerns.
- Available LME inventories, slumped to 68,250 tons, down 28% in less than a week to their weakest since December last year.
- Bullish speculative positions on the LME are at their largest since the second quarter of 2022.
Aluminium settled marginally lower by 0.10% at ₹346.75 as concerns over China’s economic activity and expectations of improving Middle East supply capped gains, although tighter inventories and supportive fiscal measures provided some stability. China’s official manufacturing PMI improved to 49.8 in August from 49.2 in July, beating expectations of 49.6 but remaining below the 50 threshold, indicating continued contraction. Aluminium inventories monitored by the Shanghai Futures Exchange declined 3% from the previous week, while stocks at three major Japanese ports fell 8.8% month-on-month to 201,000 tonnes at end-July as Middle East supply disruptions reduced imports. However, the premium offered to Japanese buyers for October-December primary aluminium shipments fell 22% to $310 per tonne from $395 in the previous quarter, reflecting expectations of improving availability. EGA and Alba are restoring production, while EGA’s Al Taweelah smelter was operating at 18% capacity and is expected to return toward previous output levels in early 2027. China’s aluminium production increased 3.8% year-on-year to 3.9 million tonnes in July, while global primary aluminium output declined 1.7% to 6.16 million tonnes. Middle East production plunged 44% year-on-year to 293,000 tonnes due to disruptions from the Iran conflict, significantly weighing on global supply. China’s exports of unwrought aluminium and semis rose 18.6% year-on-year to 643,000 tonnes in July, although they declined 9.6% month-on-month. Supply concerns also persisted as Norsk Hydro reduced output at Alunorte due to lower natural gas availability, while Alcoa cut its 2026 alumina production guidance by 200,000–300,000 tonnes to 9.5–9.6 million tonnes. China’s slower growth, with second-quarter GDP at 4.3%, may require additional policy support. Technically, the market is under long liquidation, with open interest declining 1.96% to 4,354 contracts while prices fell ₹0.35. Aluminium has support at ₹345, and a break below could test ₹343.1. Resistance is placed at ₹348.3, while a sustained move above this level could push prices toward ₹349.7.
Market Analysis:
- Aluminium dropped as China’s manufacturing activity contracted for the second consecutive month in August
- Aluminium stocks at three major Japanese ports fell to 201,000 metric tons at the end of July, down 8.8% from the previous month.
- EGA and Alba Aluminium in the Middle East are ramping up production resumption at a fairly fast pace.
Source: Kedia Stocks & Commodities Research Pvt. Ltd.
