China Post Securities released a research report stating that, from a long-term perspective, the de-dollarization process will not reverse course. It advises holding onto precious metal positions acquired at low levels firmly, disregarding market volatility. A supply-demand tightness for copper is anticipated in 2026. The bank believes that a moderate price adjustment for copper is conducive to downstream industries gradually accepting higher prices and recommends buying copper-related equities on dips. Given expected supply disruptions in 2026 and an explosion in energy storage demand, buying aluminum and aluminum-related equities on dips is advised. Regarding tin supply, significant uncertainty persists due to factors such as conflict in the Democratic Republic of Congo, Indonesian policies, and slower-than-expected production resumption in Myanmar. With AI capital expenditure expected to maintain high growth in 2026, the outlook for tin prices is promising, suggesting a strategy of buying on dips. The main views of China Post Securities are as follows:
Precious Metals: Hold Firmly. Silver prices rose this week as US CPI data continued its downward trend, staying below 3%. Strong expectations for interest rate cuts in 2026 remain unchanged. However, the possibility of Trump pausing additional tariffs on silver might alleviate short-term squeeze pressures. In the short term, major political events in the Americas during the New Year period could stimulate safe-haven demand. Combined with inflows from ETF allocation funds amid rate-cut trading, the bank remains optimistic about the performance of the precious metals sector. Long-term, the de-dollarization process is not expected to reverse, and it is recommended to hold low-cost positions firmly without fear of volatility.
Copper: Buy on Dips, Gearing Up for New Highs. Copper prices fell this week, partly due to Nvidia's downward revision of copper usage forecasts for data centers, which dampened some speculative sentiment. Concurrently, some negative feedback emerged downstream, with purchasing willingness from copper strip enterprises declining and weakness appearing in the processing market. Furthermore, the inventory relocation logic at the LME persists. Overall, due to lowered production expectations from Freeport and Teck Resources for 2026, a supply-demand tightness for copper is anticipated in 2026. Coupled with expectations of strengthened US fiscal expenditure following a government reopening and the existing inventory relocation dynamic, the bank believes a moderate price adjustment will help downstream sectors gradually accept higher prices. It recommends buying copper-related equities on dips.
Aluminum: Buy on Dips. The downstream weekly operating rate this week was 60.2%. High aluminum prices remain the core factor inhibiting downstream consumption and the recovery of industry operating rates. The operating rates of leading aluminum sheet, strip, and foil enterprises saw a slight month-on-month increase, with seasonal demand recovery observed in can stock, food packaging foil, and pharmaceutical foil. However, sharply increased procurement pressure for mid-to-low-end products is delaying restocking plans. Inventory-wise, social inventories of aluminum ingots nationwide increased by 22,000 tons last Thursday compared to the previous week, while aluminum billet inventories in major consumption areas rose by 36,500 tons. Fundamental performance still shows no significant improvement. Current fundamental consumption pressures and continuously accumulating social inventories are exerting some downward pressure on further aluminum price increases. Nevertheless, strong macroeconomic policy expectations and geopolitical risks continue to provide substantial support. Overall, considering expected supply disruptions in 2026 and an explosion in energy storage demand, buying aluminum and aluminum-related equities on dips is recommended.
Tin: Speculative Sentiment Cools, Inventories Accumulate Significantly. Tin prices rose then fell this week. On one hand, exchanges increased margin requirements, price limits, and position limits for tin trades to cool the overheated market. On the other hand, slowing momentum in silver prices affected speculative sentiment for Shanghai tin. With the Spring Festival holiday approaching, the market is entering the traditional off-season characterized by "weak supply and demand." Downstream enterprises have low willingness to restock, and Chinese social inventories of tin ingots are likely to enter a phase of seasonal accumulation. The bank believes tin supply maintains significant uncertainty due to the conflict in the DRC, Indonesian policies, and slower-than-expected production resumption in Myanmar. With AI capital expenditure expected to maintain high growth in 2026, the outlook for tin prices is promising, suggesting a strategy of buying on dips.
Lithium: 'Rush-to-Export' Expectations Drive Price Increase. Lithium carbonate prices continued to rise this week, primarily driven by an announcement from the Ministry of Finance stating that the export tax rebate rate for battery products will be reduced from 9% to 6% effective April 1, 2026, and ultimately canceled on January 1, 2027. This may stimulate expectations of demand being pulled forward into Q1 due to a "rush-to-export" effect. Additionally, downstream demand scheduling has seen some decline. Demand expectations in the energy storage sector remain strong. The "rush-to-export" expectation triggered by the tax rebate policy has led the market to hold an optimistic view of Q1 demand. The power battery sector is in a seasonal low, compounded by scheduled maintenance at some material plants, suppressing current spot procurement demand. The bank believes short-term demand for lithium carbonate has not yet been disproven, and lithium prices will maintain high volatility.
Investment Recommendations. It is advised to focus on Xingye Yinyinxi, Xinye Gufen, Huaxi Youse, Xinjinlu, Dazhong Kuangye, Guocheng Kuangye, Zhongkuang Ziyuan, Shengda Ziyuan, Chifeng Huangjin, Zijin Huangjin Guoji, Zhaojin Huangjin, Shenhuo Gufen, Zijin Kuangye, etc.
Risk Warning. Significant macroeconomic fluctuations, demand falling short of expectations, supply releases exceeding expectations, and company project progress lagging behind schedule.
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