Core Viewpoint - The rally in base metals may face challenges due to rising prices and optimistic sentiment conflicting with declining demand from manufacturers, particularly in China [1]. Group 1: Demand Trends - Goldman Sachs' recent survey indicates that order books at fabricators have decreased by 10% to 30%, as industries such as consumer electronics and hardware reduce their orders [2]. - There is a noted slowdown in grid orders, which are crucial for copper consumption in China, the largest economy in Asia [2]. Group 2: Price Movements - The LMEX Index, which tracks six major materials on the London Metal Exchange, has increased by approximately 7% this year, nearing the record set in 2022 [3]. - Benchmark copper prices rose by 0.6%, settling at $13,086.50 per ton on the LME, close to the record established earlier this month [3]. - Aluminum has reached a three-year high in London, while other metals, excluding lead, have also seen price increases [3].

Core Insights - German carmakers Mercedes-Benz and Porsche AG are facing significant financial challenges due to tariffs, price wars, and declining demand in key markets, leading to a sharp decline in profits and sales [1][5][6] Financial Performance - Mercedes-Benz reported a Q3 net profit decrease of 31% to €1.19 billion, surpassing the consensus estimate of €1.09 billion [1] - Porsche experienced a net operating loss of €967 million in Q3, a stark contrast to a €974 million profit in the same period last year, with analysts expecting a loss of €611 million [1] Market Challenges - The German automotive industry is struggling with sales across Europe, North America, and China, compounded by energy costs that are three times higher than in the US [2] - German car exports to China are significantly declining, with the North American market no longer providing a buffer due to rising US protectionism [4] - Mercedes' deliveries in China fell by 27% year-on-year in Q3, while Porsche's deliveries dropped by 26% [5] Economic Context - Germany's GDP has stagnated, with quarterly growth either flatlining or slowing in 10 of the last 12 quarters [2] - The automobile industry output in Germany contracted by 18.5% month-on-month in August [4] Strategic Responses - Porsche plans to reduce its workforce by 1,900 employees by the end of the decade due to weak demand for electric vehicles and challenging economic conditions [10] - The company is maintaining its full-year sales guidance of approximately €37 to €38 billion, with a focus on cost discipline [9] Consumer Sentiment - Consumer and export sentiment in Germany is declining, with the Consumer Climate Indicator forecast to decrease by 1.6 points to -24.1 [13] - The ongoing geopolitical tensions and inflation fears are negatively impacting consumer confidence and expectations [14]