Metal prices have continued their robust ascent, accelerating the performance growth of the A-share nonferrous metals sector in 2025 Q4 and 2026 Q1, while the overall industry valuation remains at historically low levels. Although the Middle East conflict caused a pullback in nonferrous metals prices from their highs, entering mid-April, as market sentiment regarding the Middle East geopolitical events gradually digested, US-Iran ceasefire negotiations progressed, and uncertainties around economic and liquidity expectations converged, market risk appetite has been continuously recovering. This is expected to support nonferrous metals prices in resuming their upward trajectory, providing room for further improvement in industry performance. The main views are as follows:
Sector Prosperity Rises, Accelerated Growth in Net Profit for 2025 & 2026 Q1 Despite disruptions from US tariff hikes in 2025, China's intensified counter-cyclical adjustment policies vigorously promoted economic recovery, coupled with ongoing Federal Reserve interest rate cuts. Overlapped with geopolitical and mine-side supply disruptions, nonferrous metals commodity prices maintained a generally rising trend throughout the year. The profitability of nonferrous metals enterprises also saw a significant uplift, with the overall performance of the A-share nonferrous metals sector entering a trend of accelerated growth. The sector's year-on-year performance growth for 2025 was 62.77%; specifically, the single-quarter performance for 2025 Q4 grew 109.70% year-on-year. In the first quarter of 2026, market optimism regarding macro expectations and liquidity, along with intensified competition among major powers for critical strategic metals and supply chain restructuring, drove nonferrous metals commodity prices and the A-share nonferrous metals sector to continue rising. Although prices experienced high-level volatility and a retreat after the escalation of the Middle East conflict in March, the elevated price center accumulated from the previous sustained price increases still enabled the overall performance of the A-share nonferrous metals sector in 2026 Q1 to further accelerate its growth on the lower base of the same period last year. The listed companies in the A-share nonferrous metals sector reported a 37.98% year-on-year increase in operating revenue and a 110.64% year-on-year increase in net profit for 2026 Q1.
Profitability Improves, Overall ROE for the A-share Nonferrous Metals Sector Rose Sharply QoQ in 2026 Q1 to a Multi-year High, Primarily Driven by an Increase in Overall Sales Profit Margin The overall Return on Equity (ROE) for the A-share nonferrous metals sector rose from 3.47% in 2025 Q4 to 4.76% in 2026 Q1, an increase of 1.29 percentage points quarter-on-quarter. Within this, the sector's overall sales profit margin improved from 5.42% to 8.04%, contributing a 1.55 percentage point increase to ROE, which was the core factor behind the rise in the sector's overall ROE level in 2026 Q1. Additionally, the sector's overall equity multiplier increased from 2.02 in 2025 Q4 to 2.03 in 2026 Q1, raising the ROE level by 0.02 percentage points. Conversely, the sector's overall asset turnover ratio decreased from 0.32 in 2025 Q4 to 0.29 in 2026 Q1, lowering the ROE level by 0.28 percentage points. The gross profit margin for the A-share nonferrous metals sector in 2026 Q1 was 16.76%, up 0.10 percentage points from 2025 Q4. The increase in the industry's gross margin level was primarily due to the quarter-on-quarter rise in the average price of nonferrous metals in 2026 Q1.
Investment Recommendations From the perspective of performance growth expectations for various sub-sectors in 2026 Q2, it is recommended to focus on leading copper mining stocks benefiting from improved expectations for economic recovery and demand driven by continued increases in global AI infrastructure capital expenditures, such as Zijin Mining Group, China Molybdenum Co., Ltd., Zangge Mining, and MMG Limited. For aluminum industry stocks, where Middle East geopolitical disruptions have led to substantial supply-side contraction and a widening global aluminum supply-demand deficit is expected to push up electrolytic aluminum prices, consider Yunnan Aluminium Co., Ltd., Xinjiang Joinworld Co., Ltd., Shenhuo Group, and Zhongfu Industrial. With rising oil prices accelerating the global energy transition, sustained high demand from energy storage driving lithium demand, and supply-side disruptions intensifying to amplify lithium price upside elasticity, consider lithium mining sector stocks such as Tianqi Lithium Industries, Inc., Ganfeng Lithium Group Co., Ltd., Dazhong Mining, Shenzhen Chengxin Lithium Group Co., Ltd., Sinomine Resource Group Co., Ltd., and Rongjie Share Co., Ltd.
Risk Warnings: 1) Risk of domestic economic recovery falling short of expectations; 2) Risk of Federal Reserve interest rate cuts being less than expected; 3) Risk of Middle East conflict exceeding expectations; 4) Risk of downstream demand for nonferrous metals falling short of expectations; 5) Risk of a sharp decline in nonferrous metals prices.
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