CITIC Securities released a research report stating that since Q4, heightened global macroeconomic and geopolitical uncertainties have underscored the investment value of strategic mineral resources in terms of security and price resilience. Based on current supply-demand dynamics, policy direction, and industry trends, the long-term allocation logic for copper, aluminum, and gold remains clear.
**Copper**: Benefits from tight mine supply and green economy demand. Supply constraints are intensifying due to frequent disruptions in global copper production, including Chile’s Codelco significantly raising 2026 long-term contract premiums, reflecting resource scarcity. Incidents at Freeport’s Grasberg mine and the Kamoa-Kakula mine in the DRC further tightened supply. China’s CSPT group agreed to cut production by over 10% in 2026, with processing fees (TCRC) nearing zero or negative, forcing industry consolidation. Inventories are declining globally and domestically, widening the supply-demand gap. Demand is driven by green energy and AI infrastructure, including rising copper usage in photovoltaics, wind power, and EVs. The U.S. "Project Genesis" and aging grid upgrades also support long-term consumption. Macro and policy tailwinds include potential Fed rate cuts easing financial pressure on copper prices, while China’s strict capacity controls and tech upgrades favor industry leaders.
**Aluminum**: Green transition and rigid supply constraints dominate. China’s primary aluminum capacity is capped at 45 million tons/year, with Yunnan’s dry-season cuts becoming routine. Overseas risks, such as potential production cuts at French smelters due to high power costs and an accident at Iceland’s Grundartangi plant, tighten global supply. Industry consolidation (e.g., Shandong Hongchuang’s acquisition) highlights premium capacity scarcity. Demand is fueled by EVs (higher aluminum content per vehicle, integrated casting) and solar panel frames, while traditional sectors like grid investment remain resilient. Export demand is shifting toward low-carbon aluminum due to EU’s CBAM. Policy support includes China’s aluminum industry upgrade plan targeting 30% clean energy use and 15 million tons of recycled aluminum by 2027.
**Gold**: Short-term volatility doesn’t diminish long-term value. With over 80% probability of a Fed rate cut in December, the dollar’s retreat below 102 bolsters gold’s safe-haven appeal. China’s new tax policy favors investment gold (e.g., ETFs, bars), while central bank buying (PBOC holdings hit 74.09 million oz in October) sustains demand. Physical scarcity is evident with Shanghai exchange silver inventories at decade lows, and geopolitical risks amplify safe-haven demand.
**Investment Recommendations**: Focus on copper leaders with resource reserves and cost advantages, smelters benefiting from price hikes; aluminum firms with green power and advanced low-carbon tech, plus recycled aluminum leaders; and gold ETFs, mining stocks, and resource-rich producers.
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