UBS LME Week expert calls: key points on nickel, lithium, aluminum, copper, and tungsten supply-demand and prices

Overview

This is a UBS China basic materials research note on the LME Week expert calls, covering nickel, lithium, aluminum, copper, and tungsten. The core is not stock-level valuation; instead, it uses industry expert views to map the supply-demand structure, price support, policy variables, and risk points for key metals around 2026. The overall conclusion is that in 2026 many commodities remain relatively supply constrained or supported, while mid-term incremental supply and demand swings need close monitoring.

Core views

For nickel, if Indonesia HPM policy is strictly transmitted into nickel ore transaction prices, HPAL feedstock costs would rise and support nickel prices, but limited current changes in transaction prices suggest policy execution still has a lag and room for negotiation. For lithium, experts expect global battery demand growth of 33% YoY and supply growth of 27% YoY in 2026, with tight supply-demand supporting an average price of Rmb170k/t LCE and possible temporary peaks at Rmb250k/t LCE that are not sustainable. For aluminum, an estimated 1.9mt global gap supports prices in 2026, while overseas incremental capacity after 2027, especially from Indonesia, could alter supply-demand. For copper, supply disruptions and fundamentals still support an upside price scenario, but concerns around grid, power generation, and solar demand and macro headwinds create pressure. For tungsten, demand in 2026 is expected to grow about 9% YoY while supply remains broadly flat, with scrap additions filling demand; the market remains tight, but prices are in a short-term pullback after inventory drawdown.

Analysis framework

The report adopts an expert call transcript format, making a cross-metal comparison of supply, demand, inventories, policy, cost curves, and price ranges. The analysis focuses on Indonesia nickel ore quotas and HPM policy, global lithium battery demand versus lithium supply growth, global aluminum cutbacks and new capacity, copper smelter acid pricing and TCRC, and changes in tungsten demand structure and scrap supply.

Methodology notes

• Supply-Demand Analysiscommodity_supply_demand_balance

  Supply-demand balance and gap estimation

  Price support or downside risk is assessed through demand growth, supply additions, inventories, and incremental capacity.

• Policy and Cost Analysispolicy_cost_pass_through

  Policy benchmark pass-through to raw material costs

  Using Indonesia's new HPM policy as an example, if nickel ore transaction prices follow the new benchmark strictly, rising HPAL feedstock costs could push nickel prices higher.

• Inventory Cyclerestocking_cycle

  The staged impact on prices from restocking after destocking

  The tungsten price pullback is linked to earlier overstocking; if speculative inventories are cleared, overseas premiums widen, and hard metal producers restock, price support may appear in July-August.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Nickel

  Affected by Indonesia HPM policy, HPAL costs, and RKAB ore quota changes

  Strengths

  If the new HPM benchmark is transmitted strictly, HPAL feedstock costs rise materially, potentially giving nickel prices cost support.

  Weaknesses

  Current nickel ore transaction prices have changed little, showing lag in policy transmission; additional ore quotas could ease supply pressure.

  Comparison

  Compared with tungsten and lithium, nickel's key variables are more about policy execution and mine-side supply than purely terminal demand.

  Risks

  Faster capacity expansion, technology upgrades, weak stainless steel and battery demand, and EV supply-chain disruptions could suppress prices.

• Lithium

  Driven by EVs, electrochemical storage, and global battery output

  Strengths

  Global lithium battery demand is expected to grow 33% YoY in 2026, ESS battery growth 70% YoY, with supply-demand expected to be in tight balance.

  Weaknesses

  EV sales growth is relatively weaker, and the Rmb250k/t LCE peak is considered unsustainable by experts.

  Comparison

  Lithium has higher price elasticity than aluminum, mainly due to demand growth and the risk of downward revisions in supply forecasts.

  Risks

  Commodity price volatility, regulatory changes, and lower-than-expected demand for portable electronics, EV batteries, and BESS.

• Aluminum

  Affected by global curtailments, Chinese exports, overseas incremental capacity, and downstream demand

  Strengths

  A roughly 1.9mt global supply gap in 2026 and overseas shortages from Middle East tensions provide price support.

  Weaknesses

  Downstream demand in China remains weak and inventories are high; in 2027-2028, overseas incremental supply introduces downside risk.

  Comparison

  Aluminum has stronger short-term supply-demand than mid-term, and unlike tungsten's replenishment support, aluminum is more exposed to new-capacity cycles.

  Risks

  Weak real estate construction and infrastructure demand, weakening export orders, and renewables installations below expectation; upside risks include grid capex, property completion, and supply discipline.

• Alumina

  As the upstream of aluminum, influenced by smelter cutbacks, bauxite, and new capacity

  Strengths

  Bauxite supply is ample, inventories are high, and supply stability is relatively strong.

  Weaknesses

  Structural surplus limits upside potential in alumina prices.

  Comparison

  Compared with electrolytic aluminum, alumina lacks comparable price support and more directly reflects oversupplied conditions.

  Risks

  Guinea export caps, smelter restart pace, and new capacity ramp-up can still affect prices at different stages.

• Copper

  Affected by supply disruptions, grid and solar demand, sulfuric acid prices, TCRC, and scrap policy

  Strengths

  Fundamentals still have support; under supply-disruption scenarios prices could move toward US$14,000/t; tighter short-term liquidity may support spot premiums.

  Weaknesses

  Concerns over grid investment, power generation, and solar demand could weigh on consumption; financing-led trading and arbitrage feasibility are weakening.

  Comparison

  Compared with aluminum, copper has stronger upside potential under supply-disruption scenarios, but also higher demand and macro sensitivity.

  Risks

  Commodity price volatility, regulatory changes, production disruptions, and demand shifts in real estate, power-grid equipment, appliances, machinery, and transportation.

• Tungsten

  Affected by high-end hard alloys, aerospace, defense, photovoltaics, scrap supply, and replenishment cycles

  Strengths

  Demand in 2026 is expected to grow about 9% YoY with a roughly 3kt market gap; expanded overseas premiums and restocking could support prices in July-August.

  Weaknesses

  Demand for Fe-W is declining due to substitution by ferromolybdenum; prices remain in a correction phase after prior overstocking.

  Comparison

  Tungsten, like lithium, is in a tight balance, but tungsten is more affected by inventory cycles and the demand structure of high-end manufacturing.

  Risks

  Commodity price volatility, regulatory changes, production disruptions, and demand changes in photovoltaics, steel alloys, and defense.

Key data

• Nickel potential price supportUS$21,000/t and aboveThis assumes nickel ore transaction prices track Indonesia's new HPM benchmark strictly, while accounting for royalties, freight, and rising sulfur prices.
• Potential increase in Indonesian nickel ore supply quotaAdditional 52m wmt; total supply 331m wmtExperts believe the RKAB quota could rise in July, making total nickel ore supply including Philippine imports reach 331m wmt versus 325m wmt demand.
• 2026 lithium price average forecastRmb170k/t LCE, including VATExperts expect temporary peaks to potentially reach Rmb250k/t LCE, but they do not expect this peak to be sustainable.
• 2026 global lithium battery demand growth33% YoYGlobal EV battery and ESS battery output is expected to grow 25% YoY and 70% YoY, respectively.
• 2026 global lithium supply growth27% YoYExperts think current supply forecasts may be too optimistic, with downside revision risk to actual supply.
• 2026 aluminum supply-demand gapabout 1.9mt global supply gapOverseas gap exceeds 3mt, affected by Mozal curtailment and more than 2mt cut at overseas smelters excluding Iran in the Middle East.
• China aluminum run-rate outputNearly 46mt annualizedHigher margins are pushing output near capacity limits, while downstream demand remains weak and inventories remain elevated.
• Indonesia aluminum production pathAbout 1.7mt in 2026E; about 2.7mt in 2027E; 6-7mt possible by 2030Indonesia is viewed as a key medium-term swing factor in aluminum supply.
• Copper upside scenario priceUS$14,000/tCopper prices could move toward this level if further supply disruptions combine with easing geopolitical risk.
• Domestic sulfuric acid priceRmb1,700-1,800/tIf Middle East tensions ease, experts expect support may appear at Rmb1,200-1,300/t.
• Scrap cathode rod utilization13-15% in Q1Reverse VAT invoicing and fair competition regulation suppress scrap cathode rod producers, with output down 280kt year-on-year.
• 2026 tungsten demand growthabout 9% YoYDemand structure is shifting; Fe-W demand is declining due to substitution by ferromolybdenum, while APT demand is supported by high-end hard alloys and aerospace.
• 2026 tungsten market gapabout 3kt gapPrimary supply is expected to be flat year-on-year, while incremental demand is mainly met by scrap supply, with scrap expected to rise from 20kt to 30kt.
• Tungsten concentrate price pullback65% tungsten concentrate fell 35% from the mid-March peak to Rmb680k/tThe main driver is inventory drawdown pressure from large hard-metal producers carrying four to five months of stock.

Impact & implications

For investment and value-chain monitoring, the main 2026 theme for metal prices remains supply constraints and tight balance, but the persistence differs significantly by metal. Lithium and copper are more dependent on demand realization and supply disruptions, aluminum is currently supported by overseas shortages but faces clearer mid-term supply-release pressure, tungsten is pressured short term by an inventory cycle but may be supported by Q3 replenishment, and nickel is highly dependent on Indonesia policy execution and mine-side quota changes.

Risks

• Demand below expectations, especially if construction, infrastructure, grid, power generation, photovoltaics, EV batteries, BESS, and high-end manufacturing slow.
• Incremental supply coming faster than expected, including aluminum capacity releases in Indonesia, Vietnam, and India, as well as increased nickel ore quotas.
• Policy implementation uncertainty, including Indonesia HPM pass-through, RKAB quotas, reverse VAT invoicing for scrap copper, and fair-competition regulation.
• Commodity price volatility, macro environment changes, and either easing or escalation of geopolitical tensions could alter supply and cost expectations.
• Inventory cycles may amplify short-term price swings, such as tungsten’s earlier overstocking and subsequent replenishment cadence.
• Supply disruptions, smelter acid availability, diesel supply, project delays, or restart pace may affect metal supply.

What to watch

• Whether Indonesia HPM’s new benchmark is truly transmitted into nickel ore transaction prices, and the outcome of HPAL negotiations with the government and miners.
• Whether the Indonesia RKAB quota rises by 52m wmt in July, and whether total nickel ore supply reaches 331m wmt.
• 2026 growth rates for global EV battery and ESS battery output, and the degree of downward revision in lithium supply.
• China aluminum inventories, export intensity, seasonal replenishment around Rmb24,000/t, and off-season inventory rebuilding in June-July.
• New aluminum capacity in Indonesia, Vietnam, and India, and restart progress in the EU and the Middle East.
• Grid investment, power generation, and photovoltaic consumption on the copper demand side, as well as Freeport Grasberg delay risk and sulfur inventories in African smelters.
• Scrap copper rod operating rates, effectiveness of reverse VAT invoicing, and latent inventory releases.
• Tungsten price support around Rmb650k/t, downside scenario near Rmb460k/t, overseas premium, and hard-alloy restocking in July-August.