A rebalancing of capital flows, triggered by interim earnings reports, has propelled the non-ferrous metals sector to significant gains against the broader market trend. On July 14th, the non-ferrous metals sector demonstrated strong performance, emerging as a key destination for capital reallocation amidst sharp volatility in technology stocks. By the market close, the CSI Shenwan Non-ferrous Metals Index had risen by 5.5%. Stocks such as Chihong Zinc & Germanium Co., Ltd. (SHSE: 600497) and Tianshan Aluminum Group Co., Ltd. (SZSE: 002532) hit their daily limit-up, while China Rare Earth Holdings Limited (SHSE: 600259) surged over 9%. Yunnan Aluminium Co., Ltd. (SZSE: 000807) and China Tungsten and Hightech Materials Co., Ltd. (SZSE: 000657) gained more than 8.3% and 7.8%, respectively.
The catalyst for the sector's strength against the trend was the recent flurry of interim earnings forecasts. According to statistics as of 9:30 PM on July 14th, among the 58 non-ferrous metals companies that have disclosed interim performance forecasts, 49 anticipate profit growth and 4 expect to turn losses into profits, resulting in a positive forecast rate exceeding 91%. Several sector leaders reported substantial net profit increases. Tianqi Lithium Corporation (SZSE: 002466) is projected to see its net profit grow by up to 49 times year-on-year, currently ranking first. Following closely, Xianglu Tungsten Co., Ltd. (SZSE: 002842) expects its net profit to increase by up to 34 times year-on-year. SinoMine Resource Engineering Ltd. (SZSE: 002738) and Rongjie Shares Co., Ltd. (SZSE: 002192) forecast maximum growth of 13 times and 11 times, respectively. Additionally, Tibet Mineral Development Co., Ltd. (SZSE: 000762) reported a significant turnaround from losses to profits, while Xinrui Technology Co., Ltd. (SHSE: 688257) and Ningbo Fubang Jingye Group Co., Ltd. (SHSE: 600768) anticipate net profit growth of over 500% year-on-year at the upper end of their forecasts.
Leading Gains in Lithium and Minor Metals
Currently, lithium-related stocks are the top performers in terms of interim profit growth within the non-ferrous metals sector. Tianqi Lithium Corporation (SZSE: 002466) announced on the evening of July 14th that it expects net profit attributable to shareholders for the first half of 2026 to be between 2.85 billion and 4.25 billion yuan, representing a year-on-year increase of 3,276% to 4,935%. This is primarily attributed to multiple positive factors, including the development of the new energy industry and growing downstream demand, which have driven a significant increase in the average selling price of the company's main lithium products compared to the same period last year.
Similarly benefiting from a substantial year-on-year rise in the selling prices of lithium salt products, Ganfeng Lithium Co., Ltd. (SZSE: 002460) also released a performance forecast on the evening of July 14th, estimating first-half net profit between approximately 3.65 billion and 4.6 billion yuan, an increase of 787.07% to 965.9% year-on-year, marking a turnaround from losses.
The performance of other lithium mining stocks also showed significant recovery in the first half. SinoMine Resource Engineering Ltd. (SZSE: 002738) expects net profit attributable to the parent company to range from 1.05 billion to 1.25 billion yuan, a year-on-year increase of 1,078% to 1,302%. The growth rate of its core operating profit far exceeded that of the net profit attributable to the parent company, indicating that improvements in its main business were the core driver of performance growth.
Rongjie Shares Co., Ltd. (SZSE: 002192) anticipates its first-half net profit to grow by 956.84% to 1,191.69% year-on-year, citing a significant year-on-year increase in both the production and sales volume and the selling price of lithium concentrate. Yahua Group Co., Ltd. (SZSE: 002497) forecasts net profit attributable to the parent company between 1.1 billion and 1.3 billion yuan, up 710% to 857% year-on-year, with second-quarter net profit showing an accelerated growth momentum.
Ranking second in projected growth is Xianglu Tungsten Co., Ltd. (SZSE: 002842), which expects first-half net profit attributable to the parent company of 450 million to 650 million yuan, a year-on-year surge of 2,347.83% to 3,435.76%. Zhangyuan Tungsten Co., Ltd. (SZSE: 002378) announced on the evening of July 14th that it expects first-half net profit of approximately 630 million to 750 million yuan, an increase of 447.32% to 551.57% year-on-year. Both companies attributed their performance growth primarily to a significant year-on-year rise in tungsten raw material prices, which boosted revenue from their main products and provided crucial support for profit growth.
Regarding other minor metals, Yunnan Chihong Zinc & Germanium Co., Ltd. (SZSE: 002428) expects first-half net profit attributable to the parent company between 55 million and 80 million yuan, up 148.31% to 261.18% year-on-year, benefiting from increased downstream demand for high-speed optical modules. Chihong Zinc & Germanium Co., Ltd. (SHSE: 600497) forecasts net profit attributable to the parent company of 1.55 billion to 1.75 billion yuan, an increase of 66.26% to 87.71% year-on-year. China Molybdenum Co., Ltd. (SHSE: 603993) expects net profit attributable to the parent company between 15.5 billion and 16.5 billion yuan, up 78.76% to 90.29% year-on-year, driven by increased volume and prices of its main copper products, rising molybdenum and tungsten prices, and the consolidation of its Brazilian gold mining business.
Gold, Aluminum, and Copper: Moderate Price-Volume Synergy
In contrast to the explosive, multi-fold growth seen in some minor metals, the gold, aluminum, and copper sectors exhibited more moderate and steady growth characterized by "price-volume synergy." Specifically, in the gold sector, Zhongjin Gold Corp., Ltd. (SHSE: 600489) expects first-half net profit attributable to the parent company of 4.1 billion to 4.6 billion yuan, an increase of 52.15% to 70.70% year-on-year, supported by higher year-on-year gold and copper prices and increased revenue from by-products like sulfuric acid. Western Region Gold Co., Ltd. (SHSE: 601069) forecasts net profit attributable to the parent company between 500 million and 570 million yuan, up 280.16% to 333.39% year-on-year.
In the copper sector, Zijin Mining Group Co., Ltd. (SHSE: 601899) expects first-half net profit attributable to the parent company of approximately 39.1 billion yuan, a 68% year-on-year increase, with stable growth driven by both higher production volumes and prices. Jiangxi Copper Company Limited (SHSE: 600362) forecasts net profit attributable to the parent company between 7.55 billion and 8.5 billion yuan, up 80.86% to 103.61% year-on-year.
Within the aluminum sector, Aluminum Corporation of China Limited (SHSE: 601600) expects first-half net profit attributable to the parent company between 11.2 billion and 12.2 billion yuan, an increase of 58% to 73% year-on-year, marking its best performance for the period in history. Yunnan Aluminium Co., Ltd. (SZSE: 000807) forecasts net profit attributable to the parent company between 7.5 billion and 7.8 billion yuan, up 170.98% to 181.82% year-on-year, citing higher market prices for its main products and lower costs compared to the same period last year.
Additionally, in the rare earths sector, China Rare Earth Holdings Limited (SHSE: 600259) expects first-half net profit attributable to the parent company between 370 million and 430 million yuan, an increase of 410.35% to 493.11% year-on-year, attributing the growth to changes in the industry's supply-demand dynamics and higher prices for its main products.
Industry analysts note that the profit growth across various metal companies is not merely due to "price inflation dividends" but is also being driven by downstream demand from AI infrastructure development. Tungsten precision drill bits are used in high-end PCB processing for chip manufacturing; copper cables are essential for power interconnection and high-speed connectivity in data centers; aluminum cooling systems address high-power cooling challenges and aid in lightweighting; and germanium, as a fiber optic dopant, enhances optical communication transmission efficiency. These four materials work synergistically to support the entire cycle from computing power generation to data flow.
Some institutions point out that copper prices are currently in a state of high volatility, constrained by macro factors above but supported by tight supply below. On the supply side, ongoing contraction in overseas copper mine production provides a floor for prices. On the demand side, AI computing infrastructure, global power system investments, and the new energy industry chain offer medium to long-term demand support. Lithium similarly benefits from high production schedules for energy storage and power batteries, while rare earths gain from improved supply-demand balance. Companies are actively optimizing product structures and reducing costs to enhance efficiency, further amplifying profit elasticity.
Sustainability of the Rally
From a capital flow perspective, as of July 14th, three non-ferrous metals ETFs all showed significant net capital inflows. Against the backdrop of high volatility in technology stocks, the impressive performance forecasts released by non-ferrous metals companies have attracted inflows from rebalancing funds. Many listed companies have reported high year-on-year profit growth, presenting potential for valuation repair. However, when technology stocks enter a phase of high volatility, capital is not simply shifting "to non-ferrous metals" but is seeking specific sub-sectors within non-ferrous metals that match its risk appetite.
From a valuation standpoint, analysis indicates that the latest price-to-earnings ratio of the relevant non-ferrous metals index is at a historically low level. Some securities firms remain optimistic about the valuation repair potential of the non-ferrous metals sector. They believe the supply-demand dynamics for non-ferrous metals are expected to be tight in 2026-2027, keeping industry sentiment and price expectations high. While the current market pricing for the sector is pessimistic, limiting further downside, there is room for valuation recovery. The sector faces short-term pressure from U.S. interest rate hike expectations and a strong dollar, but medium-term trends are likely to revert to fundamentals-driven commodity price movements.
Macroeconomic concerns persist. On July 13th, signals from the U.S. Federal Reserve suggested a potential tightening of monetary policy if core inflation remains high. Fluctuating expectations for interest rate hikes are exerting periodic pressure on metal prices. Analysis suggests that geopolitical uncertainties have become normalized and will continue to impact the sector. Valuations may be affected as uncertainty influences the pace and strength of demand recovery. In the short term, rising metal prices may not immediately translate into synchronous stock price gains for related companies. The market is expected to revise industry expectations once the certainty of earnings becomes more apparent.
Comments