Foreign media reported on October 12 that the 2025 London Metal Exchange (LME) Week opened on Monday (October 13). This year's conference is facing a complex background of supply disruptions, carbon border taxes and trade barriers. The markets of the three major base metals, copper, aluminum and zinc, are currently experiencing a stage where structural price differentiation and policy uncertainties are superimposed, and the global metal industry chain is facing a revaluation.
I. Aluminum Market: The battle between carbon border tax and tariffs has pushed up the European premium
With only three months left until the official implementation of the EU's Carbon Border Adjustment Mechanism (CBAM), the aluminum market has already felt the pressure of rising costs in advance. As the European Commission has not yet released the benchmark emissions data for 2026, importers lack a clear expectation of future costs, leading the market to rush to purchase low-emission products in advance. The premium for P1020A aluminium ingots in the Rotterdam region rose to $250 - $280 per ton on October 7th, a significant increase from the previous month, indicating that the expected carbon cost has been partially factored into the spot price.
Starting from 2026, Fastmarkets will incorporate CBAM additional costs into the European aluminum premium assessment system, which means that European aluminum processing and end manufacturers will face higher purchase prices.
Meanwhile, trade negotiations between the United States and Canada remain unresolved. The US previously imposed a 50% tariff on Canadian aluminium, which led to a large amount of Canadian aluminium flowing to Europe, causing the EU's imports in July to increase by more than three times compared to May. If a trade agreement is reached by the end of the year, Canadian supplies will flow back to the United States, European supply will tighten, and the premium of Rotterdam may rise again.
Ii. Copper Market: The collapse of smelting fees and the disruption of mines have pushed up prices
The copper market has become the most closely watched focus of LME Week. The benchmark negotiations for the 2026 copper concentrate processing fee/refining fee (TC/RC) have reached a deadlock, and some industry insiders predict that it will drop to zero or even negative values. The price of the interim contract signed by Antofagasta with the China-South Korea smelters for 2026 has already dropped to zero, a significant decrease from the level of 21.25 US dollars per ton in 2025.
It is widely believed in the industry that the traditional annual benchmark system has been undermined and the market is shifting towards a spot pricing mechanism. Despite the extremely low smelting costs, Chinese smelters maintain high profits by relying on the income from by-products (gold, sulfuric acid), while overseas smelters such as PASAR (Philippines) and Tsumeb (Namibia) have successively reduced production or shut down.
In addition, oil and gas traders entered the copper concentrate sector, promoting the formation of a "dual-track market" between traders and smelters, with the spot quote spread once expanding to over 40 US dollars per ton.
At the cathode copper end, the US 50% tariff exemption order alleviated short-term pressure, but the previous market hoarding had already pushed COMEX inventories to a 22-year high, with about 600,000 tons of copper being taken out of storage. On the mining side, production accidents at Grasberg in Indonesia, Quebrada Blanca in Chile and Kamoa-Kakula in the Democratic Republic of the Congo have resulted in a loss of approximately 840,000 tons of output, pushing the LME copper price to break through $10,800 per ton in October. Many institutions predict that the tight supply of copper will persist until 2027, and the price will remain at a high level with fluctuations.
Iii. Zinc Market: A sharp drop in inventory masks weak demand
LME zinc inventories have been continuously declining since July. On October 8th, they were only 38,250 tons, which has sparked market speculation about which trader is snapping up large quantities of goods. Despite a sharp decline in inventories, global demand remains weak - the sluggish recovery of China's real estate and Europe's automotive industries has led to a slump in terminal galvanizing consumption. Prices thus remain relatively firm, but the market expects an oversupply in 2026.
With the commissioning of several new mines in the Democratic Republic of the Congo, Peru, Europe and China, and the accelerated shipment of concentrate from Russia's Ozernoye mine to China, global zinc supply will increase significantly. The industry is closely watching whether the TC benchmark of zinc concentrate can continue its upward trend in 2026. It is expected that during the transition period when the mining capacity is expanding but the smelting capacity has not been fully released, the TC will remain at a high level.
Iv. Summary and Outlook
Overall, the theme of LME Week 2025 focuses on "the collision of supply constraints and institutional costs". The tight supply of copper, the rising carbon cost of the aluminum industry, and the fluctuating zinc price amid the mismatch between inventory and demand all highlight that the global metal market is entering an era of high volatility. In the coming year, the market trend will depend on three key variables:
The direction of trade and tariff policies - The Trump administration's tough stance on trade and the outcome of the US-Canada negotiations will directly affect the global flow of metals.
2. The pace of carbon policy implementation - The detailed rules of the CBAM and fluctuations in carbon prices will determine the cost structure of metals in Europe.
3. Recovery of mining and smelting capacity - Whether supply can normalize is the key to judging whether high metal prices can be sustained.
LME Week is not only a meeting for market outlook, but also an observation window on the eve of the industrial chain reconstruction. Whether it is copper, aluminum or zinc, the main thread behind the price trend is "rising costs and supply constraints", which will become the main theme of the global metal market in the coming years.
