The non-ferrous metals market is currently displaying a striking divergence: commodity prices are hitting record highs, while the equity side trails notably behind.
The People's Bank of China has increased its gold reserves for the 22nd consecutive month, LME copper has set a fresh all-time high, and Shanghai copper has surged past 110,000 yuan per tonne. However, the recent weakness in equities relative to commodities is largely driven by fluctuating expectations around a potential Fed rate hike in September.
Looking ahead, the US CPI inflation data due this Friday (September 11) is expected to be a critical catalyst. This release could directly influence the Federal Reserve's decision at its September 15-16 policy meeting, determining whether the suppressant on the financial attributes of metals is alleviated.
At this juncture, it is worth constructing a scenario analysis for market momentum, based on the assumption that this cycle involves only moderate rate hikes.
Following the Macro Rhythm: Five Key Windows for the Metals Sector
Phase One (before Friday's US inflation data): The market will remain embroiled in speculation over a September rate move. The metals sector is likely to find support at lower levels but lacks a strong catalyst for a breakout, pointing to a range-bound trend.
Phase Two (after the inflation data release, before the Fed's September meeting): If the August CPI reading meets or falls short of expectations, a September hike may be priced out, allowing the sector to recover. Conversely, if inflation exceeds forecasts, the probability of a hike rises, potentially pressuring the sector lower.
Phase Three (post-Fed meeting, before the November midterms): Regardless of the Fed's action, the sector is likely to remain robust. If the Fed hikes based on inflation data, the market will have already priced in the move during the pullback, making it a 'sell-the-rumor, buy-the-fact' event. If the Fed holds, the chances of a hike diminish closer to the midterms, potentially creating a favorable window for the sector and enabling precious metals to break out of their consolidation range.
Phase Four (post-midterms through March-April 2027): If Trump secures a victory, his pro-growth domestic agenda and tougher foreign policy could be broadly positive for metals. If he loses, fiscal policy may turn neutral due to constraints, shifting focus back to monetary policy.
Phase Five (after March-April 2027): With WTI crude oil settlement prices at $91 and $98 per barrel for March and April 2026, respectively, US inflation may face a high base effect, weakening year-on-year figures and reviving rate-cut expectations. Simultaneously, AI investment is transmitting upstream, bolstering demand for industrial metals.
Comparing With the 2022 Cycle: Tighter Supply, Stronger Demand
History rarely repeats exactly, but its logic can serve as a guide. In the 2022 cycle, the modest March hike had a limited impact, but the aggressive tightening that began in May triggered market panic and a significant copper price correction.
The key difference this time lies in supply. Global capital expenditure on non-ferrous metals nearly halted between 2020 and 2023. Given that copper mines require 4-6 years from capex to production (averaging 5 years), this points to constrained supply growth through 2025-2028, making a tight market relatively certain.
On the demand side, AI industry investment provides support, maintaining a tight supply-demand balance. This mirrors the second half of 2022, when property demand peaked but copper prices stayed firm due to rising new-energy penetration. Today, while traditional demand softens, the intensity of AI investment is sufficient to keep metals trading robustly.
Two Scenarios for Copper Tariffs, Both Point to Higher Prices
US copper tariffs represent another critical variable, with two potential paths: If the US imposes tariffs, current copper prices may still be near a starting point, with significant upside potential; if tariffs are not imposed, a short-term pullback could lower copper costs for power infrastructure, potentially accelerating Chinese investment in the sector, stabilizing and propelling prices upward.
In either scenario, the medium-term direction for copper appears upward.
Looking From the Finish Line: Pullbacks Are Opportunities
From a longer-term perspective, rate-hike and rate-cut speculation merely amplifies volatility in the metals sector, with the impact being short-lived. For allocation-focused investors, every pullback may present a buying window.
Commodity prices have already demonstrated through price action the tightness in supply and demand. The lagging equity performance may simply be a case of sentiment-driven mispricing. As macro headwinds dissipate, fundamentals will once again take the lead in pricing.
On the earnings front, the sector's performance remains impressive. All 60 constituent stocks of the Hua Bao Non-Ferrous Metals ETF (159876) have reported interim results for 2026, with every single one turning a profit. Zijin Mining, CMOC Group, and Chalco led with net profits attributable to shareholders of 39.17 billion yuan, 16.15 billion yuan, and 11.87 billion yuan, respectively. Nearly half of the constituents (28 stocks) saw their net profits more than double year-on-year, with Tianqi Lithium posting a nearly 50-fold surge and Sinomine Resource Group exceeding an 11-fold increase.
In the AI Era, Metals Build the Foundation
Different metals have varying cycles and drivers, so differentiation is inevitable. For those bullish on the sector, a straightforward approach is to gain broad coverage to capture the overall beta. The Hua Bao Non-Ferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) comprehensively cover copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin, spanning precious, industrial, energy, and strategic minor metals. Key holdings include industry leaders like Zijin Mining, CMOC Group, China Northern Rare Earth, Chifeng Jilong Gold, and Chalco. The ETF is also a margin trading target, offering an efficient tool for one-click exposure to the sector.
Source: Shanghai and Shenzhen stock exchanges, as of 2026.9.8. Note: The individual stocks mentioned are constituents of the index tracked by the Hua Bao Non-Ferrous Metals ETF (159876), with weightings as of end-August: Zijin Mining 11.14%, CMOC Group 7.12%, China Northern Rare Earth 4.4%, Chifeng Jilong Gold 3.33%, and Chalco 3.31%. The index constituents are shown for illustration purposes only, and any stock description does not constitute investment advice or reflect the holdings or trading activities of any fund under the management company.
ETF fee details: When subscribing or redeeming fund shares, the agency may charge a commission of up to 0.5%. On-exchange trading fees are subject to actual brokerage charges. The ETF does not charge a sales service fee.
Feeder fund fee details: For the Hua Bao CSI Non-Ferrous Metals ETF Feeder Fund (Class A), the subscription fee is 1,000 yuan per transaction for amounts of 2 million yuan or more, 0.6% for amounts between 1 million and 2 million yuan, and 1% for amounts below 1 million yuan. The redemption fee is 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more, with no sales service fee. For the Class C feeder fund, there is no subscription fee, a redemption fee of 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more, and a sales service fee of 0.3%.
Risk disclosure: The Hua Bao Non-Ferrous Metals ETF passively tracks the CSI Non-Ferrous Metals Index, with a base date of 2013.12.31 and published on 2015.7.13. The index constituents are adjusted according to its compilation rules, and past backtest performance does not predict future returns. The fund is rated as R3-medium risk by the fund manager, suitable for balanced (C3) and above investors; please refer to the sales institution for suitability matching. Any information in this article (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors are solely responsible for their own investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice to readers and shall not be held liable for any direct or indirect losses resulting from the use of this content. Fund investment involves risks. Past performance of a fund does not represent its future returns, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. Please invest with caution.
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