RPT-ROI-Bullish, not breathless: analysts temper base-metals calls: Andy Home

Repeats Tuesday's column to additional subscribers without any changes. The opinions expressed here are those of the author, a columnist for Reuters.

By Andy Home

LONDON, Feb 3 (Reuters) - It should come as no great surprise that copper is the analyst pick for best-performing base metal in 2026.

Not only does the red metal play a starring role in both the energy transition and the artificial intelligence narratives, it is also a market facing structural supply challenges.

The same can be said of both tin and aluminium, the other two bull stand-outs in the latest Reuters poll COMMODITYPOLL01.

But there's also a clear consensus that January's explosive price rallies, which saw London Metal Exchange (LME) copper CMCU3 hit an all-time high of $14,527.50 per metric ton and tin CMSN3 an equally unprecedented $59,040 per ton, are unsustainable.

Moreover, while most analysts are bullish pretty much across the LME board this year, they are a lot more cautious about 2027.

WINNERS

Copper, tin and aluminium are in for significant gains of 20%, 16% and 12% respectively relative to 2025 average prices, according to the median forecast of analysts contributing to the latest poll.

All three have positive demand profiles thanks to their core positioning in both energy transition and the internet-of-things mega-trends.

Copper is still the electrical conductor of choice, tin the solder that bridges the physical and virtual worlds and aluminium the cross-cutting metal for anything that needs light-weighting.

All three also face supply constraints.

Copper mine supply is already struggling to keep up with smelter demand. Tin supply is heavily concentrated and overly dependent on frontier mining jurisdictions such as the Democratic Republic of Congo and the semi-autonomous Wa State in Myanmar.

Aluminium is seeing a race to build new smelter capacity as the world realises that production growth in China, the world's largest producer, has ground to a halt as output runs up against the government's mandated 45-million-ton per year capacity cap.

Analysts expect both copper and tin to register supply deficits this year, while aluminium is on course for a marginal surplus of 80,000 tons, shifting to a deficit in 2027.

LOSERS

The outlook for nickel, lead and zinc is much more subdued. The median forecast for 2026 represents modest price gains of just 4-5% for all three.

Neither lead nor zinc feature much in the new energy and internet technology stories. Indeed, lead is likely to be a net loser from the shift away from internal combustion engines to new energy vehicles, which use smaller lead-acid batteries.

The lead market is also clearly over-supplied judging by the elevated stocks held in LME warehouses and is the only metal that analysts have marked down since the last poll in October.

Zinc defied bear expectations in 2025 but analysts seem to be betting that stronger mine output finally translates into more refined metal in 2026.

Nickel, meanwhile, has lost much of its previous electric buzz as Chinese automakers shift to non-nickel battery chemistries and Indonesia struggles to brake its runaway production growth.

SPECULATIVE FRENZY

The latest poll serves to put January's frenetic rallies in context.

The very highest copper forecast from 31 analysts is for LME cash metal to average $13,250 per ton in 2026, compared with a current price of $13,283. The median forecast is an average of $11,975 - a record poll high, but a long way short of last month's melt-up above $14,000.

The highest tin call among 16 forecasts is an average of $47,000, already taken out in the January price spike.

It's a similar story with both nickel and zinc, while aluminium and lead got to within touching distance of the highest forecasts last month.

The collective view seems to be that January's super-charged price performance will inevitably generate a reaction in the form of reduced physical buying in what are still industry-rooted markets.

That caution is even more apparent when it comes to 2027.

Only lead is expected to register any price gain to the tune of a modest 3% relative to this year.

Aluminium, copper and nickel prices are expected to be flat year-on-year, while tin and zinc prices are forecast to decline by 4% from 2026 levels.

Speculators may well disagree and January has shown the outsize impact of investment flows on price in what are finite physical markets.

But if speculators push metal prices too high too fast, global manufacturers will react by halting buying, reducing the amount of metal used or even developing totally new material inputs.

Given the current hype around the metals complex, these poll forecasts point to growing tension between what investors think metals are worth and their value to those that actually use them to make things.

(Andy Home is a Reuters columnist. The opinions expressed are his own.)

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(Editing by Marguerita Choy)

((andy.home@thomsonreuters.com, 44-207-542-4412 and on Twitter https://twitter.com/AndyHomeMetals))