Orient Securities: Industrial Metals Supercycle May Have Arrived, Focus on Copper, Aluminum, and Gold Sectors

Stock News12-08

Orient Securities released a research report stating that in a rate-cutting cycle, physical assets with tight supply-demand dynamics—even minor imbalances—can exhibit significant price elasticity. Last week, prices of metals like copper and aluminum surged notably, with LME copper closing at a record high of $11,655 per ton, up 1.88% on Friday. The firm believes the current rate-cutting cycle may have ushered in a supercycle for industrial metals, particularly copper and aluminum.

The report highlights three key drivers: 1. **Copper**: Strong demand from U.S. power infrastructure investments in 2026. 2. **Aluminum**: Growth in energy storage and substitution demand. 3. **Inflation**: Rising industrial metal prices could fuel inflation expectations.

### Key Insights: **Copper Sector**: - Supply tightness and tariff concerns may further push prices. On December 3, LME copper saw a record single-day cancellation of 56,900 tons (35% of total inventory), intensifying near-term supply fears. - Chile’s Codelco raised COMEX-LME premium bids for 2026 contracts, reflecting tariff and supply risks. - China’s CSPT announced a 10%+ cut in 2026 copper concentrate capacity to curb overcapacity, potentially stabilizing smelting fees.

**Aluminum Sector**: - Ideal for energy storage due to its thermal conductivity and lightweight properties. SMM data shows 1GWh of storage requires ~2,310 tons of aluminum; China’s 2025 storage battery capacity could hit 350GWh, driving 800K tons of demand. - High copper-aluminum price ratio (4.15) may boost substitution demand.

**Gold Sector**: - Rate cuts and rising inflation expectations (amid metal price surges) could propel gold beyond $5,000/oz in 2026.

### Investment Recommendations: - **Copper**: Focus on Zijin Mining (601899.SH, Buy) for reserves and expansion; others include CMOC (603993.SH) and JCHX Mining (603979.SH). Smelters like Tongling Nonferrous (000630.SZ, Buy) and Jiangxi Copper (600362.SH) are also noted. - **Aluminum**: Tianshan Aluminum (002532.SZ, Buy) for integrated operations; Huafon Aluminum (601702.SH, Buy) for storage demand. - **Gold**: Chifeng Gold (600988.SH, Buy) for output growth; others include Zhongjin Gold (600489.SH) and Shandong Gold (000975.SZ).

**Risks**: Economic slowdown, tariff impacts, raw material volatility, and U.S.-China relations.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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