Since March of this year, the non-ferrous metals sector has undergone a correction, driven by elevated inflation expectations due to US-Iran conflict, profit-taking from earlier gains in the sector, and strong capital inflows into the AI theme. The Shenwan Non-ferrous Metals Index fell over 14%, with a maximum drawdown of -25.89%. However, market attention on the sector has recently begun to quietly increase again. According to statistics from Yuanda Information Securities Research Institute, in the final week of May, the number of institutional research visits to the non-ferrous metals industry ranked among the top three across all sectors. Concurrently, following the earlier adjustment, the valuation of the Shenwan Non-Ferrous Metals Index has seen a significant decline, enhancing its margin of safety.
Demand Expansion Meets Supply Rigidity
Weak Dollar Cycle May Present Timely Opportunity for Mining Allocation
"Despite experiencing a phase of volatile correction, the core investment thesis for the non-ferrous metals sector remains unchanged in the long run. The triple drivers of demand expansion, supply constraints, and a weak US dollar environment remain robust," analyzed Wang Yang, the designated fund manager for the Invesco Great Wall CSI Non-ferrous Metals Mining Theme ETF-Linked Fund.
On the demand side, emerging sectors such as AI computing power, semiconductors, power grids, and energy storage are driving a surge in demand. Non-ferrous metals are evolving from traditional construction materials into the "essential industrial cornerstone" of the AI infrastructure era, leading to continuously expanding demand. Taking copper as an example, high-growth areas like data centers, new energy facilities, and electric vehicles are expected to drive sustained expansion in global copper demand over the next 5 to 10 years. Institutional projections indicate that the global copper supply-demand deficit could widen to 8 million tons per year by 2035. This trend is not isolated; rare earths are also benefiting significantly from new energy, high-end manufacturing, artificial intelligence, and other emerging fields. Global annual demand for rare earths is expected to reach 150,000 tons by 2040, an increase of approximately 66.67% from 2024. Furthermore, driven by sustained central bank gold purchases and safe-haven demand, the growth in investment and reserve demand for precious metals is expected to persist.
On the supply side, increasing output from upstream resources is becoming increasingly difficult. The mining industry typically requires a cycle of over 5 years from capital investment to capacity release. The previous downturn in commodity prices suppressed capital expenditures in the sector, leading to limited new copper mine supply in the current and coming years. For electrolytic aluminum, influenced by policies against overcapacity, capacity constraints are clear. The global aluminum market is expected to remain in a tight balance over the next 1 to 2 years, with supply constraints gradually transmitting to prices. Since the concentrated implementation of domestic policies to curb overcapacity, the supply structure in the mining sector has continued to optimize. Price indices for upstream mining and raw material industries have shown a significant rebound, turning positive year-on-year in March 2026. Price stabilization aids in the recovery of profit margins for upstream enterprises. Simultaneously, geopolitical conflicts have triggered a global wave of resource control, with stricter export controls and production cuts for critical minerals, leading to heightened scarcity amid supply contraction.
Additionally, from a macro perspective, a weak US dollar cycle provides a favorable environment for commodity pricing. The US government faces challenges of high deficits and high debt, potentially leading to further dollar weakness, which generally benefits US dollar-denominated non-ferrous metals. Meanwhile, there may be risks of excessive valuation expansion in global financial assets, whereas commodities appear undervalued relative to stocks and could serve as a potential safe haven amidst uncertainty.
Covering Industrial Metals, Gold, and Rare Earths
Focusing on Leading "Resource-Rich" Companies for Purer Exposure
For investors, how can one more efficiently capture opportunities in upstream resources? The Invesco Great Wall CSI Non-ferrous Metals Mining Theme ETF-Linked Fund may provide a more pure and focused tool for off-exchange investors to position in upstream resources.
This fund primarily invests in the Invesco Great Wall Non-ferrous Metals ETF, which tracks the CSI Non-ferrous Metals Mining Theme Index. In its construction, this index requires constituent stocks to "possess mineral resource reserves," excluding a batch of companies involved in downstream processing and application, thereby selecting listed companies with upstream resource endowments for a purer resource attribute. As of the end of May 2026, the underlying index comprised 39 constituents with an average market capitalization of 98.7 billion yuan. The top ten holdings accounted for over 51% of the index weight, highlighting its concentration on industry leaders. In terms of sector structure, copper is the largest weighting sector at 28.7%, followed by gold at over 13%. The index also covers strategic varieties like rare earths and cobalt. The diversity in its sector allocation can also help investors more balancedly capture opportunities within resource sub-sectors.
Benefiting from the concentration advantage of leading companies and the scarcity premium of core resource products, the profitability of the Non-ferrous Metals Mining Index is more prominent. Profit forecast data shows that the index's net profit attributable to parent company owners grew by 82.77% in 2025, outperforming comparable indices like the broad Non-ferrous Metals Index (81.32%) and the Industrial Non-ferrous Metals Index (71.94%). Its Earnings Per Share (EPS) reached 1.77 in 2025 and is projected to further increase to 2.27 in 2026. This solid profit foundation is reflected in market performance. Data shows that as of May 31, 2026, the Non-ferrous Metals Mining Index achieved an annualized return of 12.61% over the past five years, significantly outperforming the broad Non-ferrous Metals Index (9.78%) and the Industrial Non-ferrous Metals Index (8.42%).
The present may be a favorable time to position in the non-ferrous metals mining sector. Following the earlier adjustment, the price-to-earnings ratio of the Non-ferrous Metals Mining Index has fallen to the 30.99th percentile level over the past decade, indicating its valuation is more attractive than nearly 70% of the time in the past ten years. The currently issuing Invesco Great Wall CSI Non-ferrous Metals Mining Theme ETF-Linked Fund provides a convenient tool for off-exchange investors to position in the sector at potentially lower levels.
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