China Merchants Securities Co.,Ltd. (ASX: 600999) has released a research report stating that the non-ferrous metals sector is being supported by insufficient supply elasticity, relatively low inventory levels, and realized corporate earnings, while macroeconomic uncertainty and declining risk appetite are weighing on equity valuations.
Prior corrections have already released some risk, and the allocation value of industry leaders with earnings sustainability and reasonable valuations is gradually emerging.
Looking ahead to the fourth quarter, investors should capture allocation certainty through earnings resilience and capture recovery elasticity through macro improvement.
If macro headwinds ease and resonate with fundamentals, the sector could see upward earnings revisions and valuation repair.
In terms of allocation, priority should be given to gold and copper, followed by tantalum, tungsten, and other varieties, with a focus on companies that have outstanding cost advantages, high-quality resource reserves, clear production growth, and stable shareholder returns.
The key views of China Merchants Securities Co.,Ltd. (ASX: 600999) are as follows:
Review of Q1-Q3 2026
As of September 30, 2026, the non-ferrous metals sector had fallen 10.7% year-to-date, ranking 17th among first-tier industries.
Affected by market style rotation and digestion of earlier gains, the sector underwent adjustments with notable internal divergence — minor metals posted gains while other sub-sectors saw varying degrees of pullback.
Most resource stock corrections largely reflected valuation-level adjustments rather than weakening fundamentals; in 2026, average prices for most metals were higher than the previous year, and commodity prices are gradually transmitting to corporate earnings, which is expected to provide support for sector valuation recovery.
Gold was temporarily pressured in the short term by repeated shifts in Federal Reserve tightening expectations, but sustained global central bank gold purchases, weakening dollar credit, and safe-haven demand continue to provide long-term support.
If the Fed subsequently slows its tightening pace, gold prices are expected to stabilize and rebound, and A-share/H-share gold stocks have room for recovery after valuation pullbacks.
The silver supply-demand gap persists, awaiting a catalyst from improved liquidity.
This round of silver demand is supported by photovoltaics, electronics, and physical investment, with global inventories still at low levels.
If the Fed slows its tightening pace, silver's financial and industrial attributes could resonate, and silver prices will stabilize.
Copper is being repriced by geopolitics.
Global copper mine new supply continues to fall short of expectations, TC has broken below -$200/tonne, sulphuric acid prices have fallen, and smelting production cut pressure expanded in Q3.
Recent overseas strikes and other supply disruptions have increased, further strengthening expectations of tightening copper concentrate and refined copper supply.
On the demand side, AI-driven power equipment exports maintained growth, while traditional sectors were generally under pressure, but mine-side scarcity provides a solid floor for copper prices.
Q4 supply-demand fundamentals are strong, and the main variables for copper prices lie in the macro environment and the direction of the US Section 232 tariff policy — attention should be paid to buy-on-dips opportunities.
Tungsten faces hard supply constraints plus strategic premium, and prices are expected to bottom out and rebound in Q4.
The Q3 peak season was lackluster, and tungsten prices pulled back more than expected, mainly due to a temporary weakening in downstream cemented carbide orders, a slowdown in photovoltaic tungsten wire penetration, and active destocking by traders; however, the hard constraint on the mine side remains unchanged, with domestic tungsten mine output falling 9% year-on-year in January-August.
Overseas tungsten price premiums have widened, providing support for exports and domestic tungsten prices.
Q4 enters the traditional peak season for cemented carbide, and combined with downstream restocking demand released after tungsten prices fell excessively, tungsten prices are expected to bottom out and rebound in Q4.
The pricing logic of the industry chain has shifted from purely industrial attributes to a dual driver of resource scarcity plus strategic security.
China is strengthening the back end of the industry chain, shifting from resource dominance to a "resources + high-end manufacturing" comprehensive advantage, and companies with full industry chain layouts stand to benefit.
Tantalum strategic resource supply rigidity is becoming prominent, with emerging demand continuing to be released.
The Rubaya mining area in the Democratic Republic of Congo experienced two collapses during the year, damaging global supply.
Domestic self-sufficiency is less than 5%, making China highly dependent on imports.
AI computing power is driving demand for tantalum capacitors and sputtering targets, with consumption growth far exceeding mineral output growth, and the supply-demand mismatch is driving tantalum prices higher.
Tantalum prices are expected to continue their Q3 upward trend in the fourth quarter.
Risk warnings: significant volatility in raw material and main product prices, technology iteration risks, demand decline risks, and secondary market volatility risks.
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