Base metal prices have continued their strong rally in 2026 after posting stellar gains in 2025. The S&P/TSX Global Base Metals Index, which surged 49 per cent in 2025 — its strongest annual gain since 2016 — is currently at 380, up a further 33 per cent this year.Among individual base metals, tin tops the chart, with prices rising about 36 per cent so far this year. It is followed by aluminium, up 22 per cent. Copper, the best-performing base metal in 2025 with a 42 per cent gain, has advanced another 10 per cent in 2026. Copper prices touched a record high of $14,527 per tonne on the London Metal Exchange (LME) in January.Early triggersA weaker US dollar and supply disruptions were the primary drivers of the base metals rally in 2025. The Dollar Index declined nearly 12 per cent, from a high of 110 in January to a low of 96.40 in July 2025, before moving largely sideways for the remainder of the year.Supply disruptions became a major support factor in the second half of 2025. For instance, copper supply was hit by an estimated 600,000-tonne disruption following an accident at Indonesia’s Grasberg mine, one of the world’s largest copper mines. The disruption accounted for roughly 3 per cent of global copper production.Demand from China, particularly for copper and lead, also supported prices. “China rolled out several stimulus measures to revive economic growth, and that was one of the key factors supporting base metal prices,” said Saif Mukadam, Research Analyst, ICICI Direct.Story in 2026The supply disruption narrative has continued into 2026 following the US-Iran conflict. The closure of the Strait of Hormuz has intensified supply concerns, particularly for aluminium and copper.Gulf countries account for about 9 per cent of global aluminium production. They also contribute nearly 50 per cent of global seaborne sulphur exports. Sulphur is a key input in copper production, making the metal vulnerable to supply-chain disruptions. For zinc, smelter closures in Peru, the world’s second-largest producer, have also lent support to prices.clouded OutlookUnless tensions between the US and Iran ease, concerns over supply disruptions are likely to persist, keeping upward pressure on metal prices.However, sustained high metal prices could eventually contribute to broader inflationary pressures, especially when combined with elevated energy costs.As a result, the US Federal Reserve, under its new Chairman Kevin Warsh, may be compelled to raise interest rates if inflation accelerates due to higher oil prices. Higher interest rates would support the dollar but could weigh on commodity prices.“Metals thrive on cheaper money. Higher interest rates make borrowing more expensive, and that can slow demand for metals over time. That is one key concern,” said Sunil Katke, Head – Commodities (Retail), Kotak Securities.However, Sandeep Daga, Founder and CEO of Metal Intelligence Centre (MIC), cautioned that market participants are focussing excessively on supply disruptions while overlooking demand-side risks.“Nobody is looking at the demand side of the equation. Chinese data shows weak retail sales, slowing industrial production and construction activity, while growth in electric vehicles and solar power generation has turned negative,” Daga said.Indeed, the International Copper Study Group (ICSG) revised its 2026 outlook in April. The group now expects the copper market to end 2026 with a surplus of 96,000 metric tonnes, compared with its earlier forecast of a 150,000-tonne deficit.On the chartsBased on technical analysis, LME copper ($13,636 per tonne) could form a top in the $15,000-16,000 per tonne range. Immediate support is seen in the $11,500-11,000 region.LME aluminium has moved decisively above the key resistance level of $3,400 per tonne. As long as it remains above this level, the metal has the potential to rally towards $4,000 per tonne.Published on May 30, 2026