Nonferrous metals stocks witnessed substantial net inflows of 27.4 billion yuan from main funds today (June 22nd), making the sector the top recipient among the 31 primary Shenwan industries. The largest ETF by AUM tracking the underlying index, the Nonferrous Metals ETF Huabao (159876), saw its on-exchange price surge 5.52%, reclaiming both the 60-day and 120-day moving averages.
Since hitting its annual low of 0.922 on June 8th, the ETF's daily chart appears to be forming a rising pattern from the lows, suggesting a potential right-side signal. Capital swiftly entered the market, with the Nonferrous Metals ETF Huabao (159876) recording net subscriptions of 11.4 million units for the day.
Among its constituent stocks, nine companies, including Xiamen Tungsten Co.,Ltd. (600549), Chihong Zinc & Germanium Co., Ltd., Jinduicheng Molybdenum Co.,Ltd., and Yunnan Tin Co.,Ltd., hit their daily price limit-up. Major weighted stock China Molybdenum Co.,Ltd. rose over 8%, while China Northern Rare Earth (Group) High-Tech Co.,Ltd. and Aluminum Corporation of China Limited gained more than 5%. Zijin Mining Group Company Limited and Jiangxi Copper Company Limited advanced over 2%.
Catalyst for the Rally
The rally was sparked by new countermeasures from two government ministries. On June 22nd, China's Ministry of Commerce announced the addition of 10 American entities, including a U.S. rare earths company, to an export control list. Concurrently, the Ministry of Finance issued a notice prohibiting government procurement activities from purchasing products manufactured by 46 U.S. companies.
Rare Earths Outlook
Rare earths, often termed the "vitamins of modern industry," are scarce, non-renewable strategic resources. China possesses a complete industrial chain from mining and separation to deep processing, granting it significant pricing power. Analysis suggests that with the comprehensive escalation of rare earths control, the resource's scarcity is further highlighted, potentially leading to an upward shift in price benchmarks. Enhanced by their strategic attributes, the equity sector may benefit from a simultaneous increase in earnings per share (EPS) and price-to-earnings (P/E) multiples.
Supply-Demand Dynamics and the "Computing Metals" Rally
Notably, supply-demand imbalances are fueling a price surge in so-called "computing metals." Industry consensus points to two core drivers for the current uptrend in minor metal prices: rigid supply constraints coupled with expanding demand from emerging industries. In the near term, the global supply-demand situation has not fundamentally changed, with genuine downstream demand remaining robust, suggesting prices may stay at relatively elevated levels for the foreseeable future.
Taking tin as an example, from a demand perspective, a single AI server consumes over four times more tin than a traditional server. Every stage, from advanced packaging to solder joints in optical modules, requires additional tin. Research indicates that the iterative upgrades of high-speed optical modules drive demand for solder paste through both volume and price: on the volume side, higher module speeds increase the number of channels, DSP bases, and optical/electrical chips, raising solder joint count and paste consumption per module; on the price side, the ongoing miniaturization of component solder joint sizes and pitches, alongside the industry's shift towards 2.5D/3D high-density interconnect processes, is pushing solder paste specifications from T5/T6 to higher-end T7/T8 grades, leading to rising product prices.
Analysis posits that with the arrival of the energy transition, the development of new quality productive forces, and an expansion cycle in computing capital, the demand logic for minor metals has shifted from traditional industrial cycle drivers to long-term structural growth drivers. Further research notes that the supply-demand dynamics for rare metals continue to improve. AI-empowered varieties like rare earths, tungsten, molybdenum, tin, and germanium are driven by both new energy and AI. Supply remains tight due to quota restrictions, environmental production limits, and limited overseas growth, while demand increments from sectors like photovoltaics, high-end special steel, and semiconductors are clear, suggesting a sustained upward trend in price benchmarks.
Positioning for the Sector Momentum
The Nonferrous Metals ETF Huabao (159876) and its feeder funds (Class A: 017140; Class C: 017141) track an index comprehensively covering industries including copper, aluminum, gold, rare earths, and lithium. This broad coverage allows for better capture of the sector's overall beta performance. Additionally, as a margin trading and securities lending eligible instrument, this ETF offers an efficient tool for gaining exposure to the nonferrous metals sector.
As of the end of May, the Nonferrous Metals ETF Huabao (159876) had a size exceeding 1.5 billion yuan, making it the largest ETF among the three products tracking the same underlying index in the market.
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