LME’s Metal Rally: Why Are Copper, Aluminum, Zinc, and Nickel Prices All Rising?

The end-of-week trading session on the LME saw a simultaneous price increase across many metals. Metals like Copper (Cu), Aluminum (Al), Nickel (Ni), Lead (Pb), Tin (Sn), and Zinc (Zn) are having an exciting trading session. The prices of these metals on the LME market are all rising. Here are the current figures:

• CU (Copper): 10102 (+0.18%) ↑ Rising
• AL (Aluminum): 2686.0 (+0.56%) ↑ Rising
• ZN (Zinc): 2919.5 (1.14%) ↑ Rising
• NI (Nickel): 15330.0 (+0.80%) ↑ Rising
• PB (Lead): 2033.5 (0.40%) ↑ Rising
• SN (Tin): 34835.0 (0.40%) ↑ Rising

Expectations of a Fed interest rate cut are a key factor—it weakens the USD and stimulates capital flows into assets/metals—but the overall picture for metal prices is a combination of financial factors (interest rates/dollar), real demand factors (especially from China), and physical supply-demand dynamics (inventories, production, logistics). The London Metal Exchange (LME) price board shows that several base metals like copper, aluminum, nickel, and tin are all rising as a result of a “synergy” of expectations for monetary policy easing in the U.S., a weaker U.S. dollar, physical demand from China, and supply-demand factors in the supply chain.

Expectations of a Fed Rate Cut: A Direct Financial Catalyst

The financial markets are increasingly betting on the possibility that the U.S. Federal Reserve (Fed) will begin cutting interest rates in the coming months. When interest rates are expected to fall, the opportunity cost of holding non-yielding assets (like gold and physical metals) decreases, creating conditions for capital to flow into this asset class and push prices up. Recent news and analysis reports show that weaker-than-expected U.S. economic data has increased the probability of rate cuts—this is one of the key reasons why the prices of gold and other metals are rising.

A Weaker U.S. Dollar: Indirectly Boosting USD-Priced Commodities

Many metals are priced in U.S. dollars. When the USD weakens, these metals become cheaper for buyers using other currencies, which stimulates demand. The first half of 2025 has seen a weakening trend in the U.S. dollar, which increases purchasing power in the physical market and helps drive up LME prices.

Real Demand from China: The “Decisive Demand” for Base Metals

China remains the world’s largest consumer of metals. Signs of economic stimulus (fiscal/infra stimulus) and supportive policies for the manufacturing and infrastructure sectors have led many analysts to forecast that metal demand will either be sustained or recover. This puts downward pressure on physical inventories and supports prices. Expert reports from industry researchers state that stimulus measures and manufacturing demand in China are factors supporting base metal prices.

LME Inventories and a Tightening Physical Market for Some Metals

Beyond financial developments, changes in the “physical market” (such as withdrawals from warehouses, changes in premiums, and logistics supplies) also have a strong impact. For example, some regional markets are reporting that withdrawals from storage have temporarily reduced the available supply in the market, pushing up the prices of aluminum and some other metals. These warehouse fluctuations cause significant short-term price volatility, although the medium-term outlook still depends on imports and production.

Supply Signals: Some Metals Face Supply Bottlenecks

The global supply chain is becoming differentiated: copper and aluminum are subject to strong demand from electrical/EV/infrastructure applications, making their prices sensitive to demand-related news.

Expert Opinions: From Caution to Conditional Optimism

Some investment banks and research groups believe that monetary easing (rate cuts) is an important catalyst for the recovery of metals because it will stimulate manufacturing activity and reduce financial burdens. However, they also warn that the effect may vary by metal and timing.

Major investors and fund managers (and some market thinkers) are seeking “safe havens” by diversifying as economic risks increase. Therefore, in addition to gold, some base and precious metals are also benefiting from risk-hedging capital flows.

One viewpoint warns that if U.S. economic data is unexpectedly strong or if inflation re-accelerates, the Fed may postpone rate cuts. This would reverse expectations and could pull metal prices down. Therefore, experts urge close monitoring of employment data, PCE inflation, and Fed statements.

This article is a compilation from the internet and is for reference purposes only.