By Andy Home
LONDON (Reuters) -Aluminium is expected to be the top performer among the London Metal Exchange (LME) base metals pack in 2025, with analysts forecasting a supply shortfall of the light metal this year.
Analysts participating in the Reuters January base metals poll also see higher average cash prices for zinc, copper and tin this year relative to 2024.
Nickel is the conviction bear call even after the average LME cash price fell by almost 22% last year. No-one expects anything other than continued nickel oversupply both this year and next.
Supply dynamics are top of analysts’ minds in terms of likely winners and losers this year but a troubled macro picture hangs over the industrial metals complex.
Median forecasts for copper, tin, nickel and lead have all been cut since Reuters’ last quarterly poll in October, reflecting concern about the demand impact from a tariff trade war.
ALUMINIUM BULLS
The average LME cash aluminium price rose by 4.9% year-on-year in 2024 and is set to climb another 6.3% to $2,573.50 per metric ton in 2025, according to the median forecast of 33 analysts participating in the January poll.
The outcome was little changed from the October poll, suggesting a hardening conviction in the metal’s bullish prospects.
Underpinning the higher price forecast is an expected shift in market dynamics to a supply shortfall. Analysts swung their consensus to a market deficit of 8,000 tons in 2025 from oversupply of 100,000 tons in the previous poll.
The deficit is expected to grow to 365,000 tons in 2026 with the average price lifting further to $2,626 per ton.
Tightness in the alumina market has recently buoyed the aluminium price but the bigger structural supply constraint is China’s smelter capacity cap.
China’s national output was running at an annualised 43.9 million tons at the end of 2024, close to the 45.0 million cap.
If the world’s largest producer has run out of expansion potential, it’s far from clear how the rest of the world is going to fill the output gap.
ZINC PRICE RALLY SEEN FADING
Zinc is forecast to be the second-best performer this year with the average cash price expected to increase by 4.2% to $2,895 per ton.
Moreover, analysts lifted their zinc price expectations from the October poll against the broader trend.
This tells you how much the zinc narrative has changed in the last three months. A market expected to register massive oversupply has turned out to be surprisingly tight as a shortfall of mined concentrates drags down global metal production.
However, that should change this year as mine supply recovers and analysts expect zinc prices to weaken over 2025 and 2026. Indeed, zinc is the only LME base metal projected to fall in price next year.
Zinc’s premium over sister metal lead will also ease since the consensus is for lead prices to average a steady $2,050 both this year and next.
DIALING BACK ON COPPER
Analysts are dialing back expectations for copper’s potential upside.
While the average cash price is expected to rise by 3% to $9,425 per ton this year, the median forecast is 4.8% lower than the October poll.
This should be no great surprise since copper is the LME metal most sensitive to shifts in macro sentiment.
And right now the macro outlook is looking ever more stormy after U.S. president Donald Trump imposed a 10% tariff on imports of Chinese goods.
The carefully calibrated Chinese response offers some hope that trade talks could avert a full trade war but copper is particularly sensitive to any negative consequences for China, the world’s largest buyer of the red metal.
The market spent much of last year looking for signs of revival in China’s giant manufacturing sector and this year is shaping up to be no different. Tariffs and the threat of more to come muddy the waters.
THINGS CAN ONLY GET BETTER FOR NICKEL
The median nickel forecast for 2025 has also been downgraded by a hefty 5.9% to $16,265 per ton since October as market oversupply becomes increasingly visible in the form of rising LME stocks.
But having already fallen so heavily over the last year, analysts don’t think there’s much further downside.
The consensus is for LME cash nickel to bottom out at an average $15,550 per ton in the current quarter before edging steadily higher to $16,750 in the fourth quarter.
The price recovery is expected to continue into 2026 with a median cash price forecast of $17,637 per ton. The betting seems to be that Indonesia, the world’s dominant producer, will put the brakes on its runaway production growth to shore up prices.
UNPREDICTABLE TIN
Tin has been a particularly volatile market over the last couple of years and there’s little consensus as to what is next in store for the soldering metal.
The median forecast is for a modest 2.6% lift in average price this year relative to 2024.
But that masks a very wide range of expectations, stretching from a low of $23,750 to a high of $33,000 per ton. The spectrum of outcomes is an even wider range of $21,000 and $37,000 for 2026.
Which says much about how difficult it is to read this small but profoundly opaque market.
The opinions expressed here are those of the author, a columnist for Reuters.