Central China Securities has released a research report stating that against the backdrop of tight copper concentrate supply and surging green demand, copper prices are expected to maintain an upward trend. The firm projects the average aluminum price in 2026 to hover around RMB 22,000 per ton. With improving profitability among aluminum producers leading to increased dividend payouts and rising dividend yields, the sector is demonstrating income-generating characteristics. Supported by the Federal Reserve's rate-cutting cycle, effective domestic stimulus policies, sustained economic growth, and growing global demand for nonferrous metals, the brokerage maintains its "outperform" rating on the nonferrous metals and new materials industry, recommending focus on copper, aluminum, gold, and superhard materials sectors.
Key insights from Central China Securities:
**Copper: Supply-demand imbalance drives price increases** Dubbed "the new gold" amid U.S.-China trade tensions, copper's strategic value continues to rise. Supply constraints stem from declining global ore grades, insufficient long-term capital expenditure limiting new mining projects, and intensified mining disruptions. Demand remains robust, supported by global monetary easing and green transition trends across power infrastructure, NEVs, and data center construction. The firm recommends focusing on leading companies with substantial reserves and clear capacity plans, including Zijin Mining (601899.SH) and CMOC Group (603993.SH).
**Aluminum: Tight supply sustains industry prosperity** Domestic aluminum production faces a 45-million-ton capacity ceiling with limited new capacity additions, while overseas expansion progresses slowly. Structural demand resilience, low inventories, and cost support suggest prices will remain firm, with the sector maintaining high profitability. The report highlights Yunnan Aluminium (000807.SZ), Mingtai Aluminum (601677.SH), and Shenhuo Group (000933.SZ) as key players.
**Precious Metals: Gold's value proposition strengthens, silver shows volatility** Gold's investment appeal grows amid Fed policy shifts, dollar system pressures, and macroeconomic uncertainties. Silver exhibits greater price sensitivity during liquidity easing cycles, with the gold-silver ratio declining from 100 in May 2025 to about 80 by November, suggesting further correction potential. Top picks include Zijin Mining (601899.SH), Shandong Gold (600547.SH), Zhongjin Gold (600489.SH), and Shengda Resources (000603.SZ).
**Superhard Materials: Functional diamonds offset traditional sector slowdown** While conventional applications face cyclical downturns, breakthroughs in functional diamond technologies—particularly diamond/copper composites for high-end chip cooling—present new growth opportunities. Recommended stocks include Sinomach Precision (002046.SZ) and SF Diamond (300179.SZ), both active in functional diamond development.
**Risk factors:** 1) Unexpected Fed rate hikes depressing metal prices 2) Global recession exceeding expectations, weakening demand 3) Surprise mine output increases impacting prices 4) Slower-than-anticipated functional diamond R&D progress 5) Significant raw material price fluctuations 6) Geopolitical conflicts 7) Lower-than-expected demand for copper/aluminum ores 8) Manufacturing growth falling short of projections
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