3Q Preview: Loosening Ali Fundamentals vs. Binary Copper Outcomes; Prefer OW-rated FCX; Cautious AA 4Q Profit Warning

Since the end of the US/Iran ceasefire (Jul-7), J.P. Morgan's base metals coverage (+10%) has outpaced indices (SPX +4%, XME +5%, BCOMIN +2%), with a clear divergence between metals. Aluminum fundamentals are loosening: JPM Commodities Research forecasts aluminum pivoting from recent deficits to oversupply in coming quarters amid Middle East production recovery and Indonesian supply growth, keeping the strip in backwardation and weighing on the MWP. Copper faces a binary outcome: lean ex-US inventories and China's second seasonal demand peak could skew the market toward a more bullish pinch point until either time erosion wanes Section 232 tariff conviction or the administration makes a final S232 decision; JPM's base case remains phased, escalating S232 copper tariffs. The firm reiterates OW-rated Freeport (FCX, $92 Dec-27 PT) as a top pick given the Grasberg ramp, COMEX leverage and leaching initiatives;