On Friday, March 27, the A-share market demonstrated independent strength despite an overnight plunge in U.S. stocks, with energy metals leading the gains. Lithium mining stocks soared, with Ganfeng Lithium Group, Yongxing Special Materials Technology, and Chengxin Lithium Group hitting the daily limit-up. Yunnan Chihong Zinc & Germanium, a leading minor metal company, also surged to a record high.
Among popular ETFs, the Huabao Nonferrous Metals ETF (159876), which aggregates leading companies in the nonferrous metals sector, saw its intraday price rise by up to 3.61%, closing 2.91% higher and reclaiming its 10-day moving average.
In terms of capital flows, over 14.8 billion yuan in main funds poured into the nonferrous metals sector, making it the top recipient among the 31 primary Shenwan industries. Ganfeng Lithium Group led the A-share market with net main fund inflows of 3.734 billion yuan for the day.
On the news front, the main lithium carbonate futures contract broke through the 160,000 yuan per ton mark, accumulating a gain of over 14% in the past five days. As global supply and demand dynamics shift, with "supply disruptions" coinciding with an "energy storage boom," a new market cycle may be emerging:
1. On the supply side, Zimbabwe, the world's fourth-largest lithium producer, has indefinitely suspended all exports of raw and concentrated lithium ore since late February. This ban has persisted for nearly a month, far exceeding market expectations of a short-term disruption. Zimbabwe contributes approximately 10% of global lithium production, with nearly 20% of its lithium concentrate destined for China. This supply cut has sharply tightened spot market availability domestically in the short term.
2. On the demand side, the energy storage market is experiencing explosive growth in 2026. Data shows that domestic energy storage battery cell production surged 91% year-on-year in the first two months of 2026. Driven by the AI data center construction boom and substitution effects from high oil prices due to Middle East geopolitical conflicts, UBS predicts a 55% growth in lithium battery energy storage demand for 2026. Energy storage is transitioning from a supporting role to a leading one, with its share of lithium demand expected to jump from single digits currently to 42% by 2035.
Industrial Securities noted that downstream battery cell demand remains robust. Meanwhile, ongoing disruptions from mining license renewals in Jiangxi province, coupled with persistent supply concerns, strong spot demand, slower-than-expected resumption of lithium mining, and export restrictions from Zimbabwe, suggest lithium prices may continue to exhibit strength in the near term.
Looking ahead for the nonferrous metals sector, Shenwan Hongyuan stated that recent Middle East geopolitical tensions, rising energy prices, stagflation concerns, and heightened asset volatility have pressured the sector overall. However, driven by long-term deglobalization trends, investment logic for precious metals, commodities, and strategic minor metals has entered a new paradigm. The nonferrous metals sector is poised for further gains, with short-term fluctuations offering strategic entry points within the year.
The Huabao Nonferrous Metals ETF (159876) and its feeder funds (Class A: 017140, Class C: 017141) track an index comprehensively covering sectors such as copper, aluminum, gold, rare earths, and lithium, spanning different cycles including precious metals (for hedging), strategic metals (for growth), and industrial metals (for recovery). This broad coverage allows for better capture of the sector's beta movements. The ETF is also a margin trading security, making it an efficient tool for gaining exposure to the nonferrous metals sector.
As of the end of February, the Huabao Nonferrous Metals ETF (159876) had a net asset value of 2.427 billion yuan, with an average daily turnover exceeding 100 million yuan over the past month. Among the three ETFs tracking the same index, it leads in both size and liquidity.
Investors should be aware that recent market volatility may be significant, and short-term performance is not indicative of future results. It is essential to invest prudently based on individual financial circumstances and risk tolerance, with careful attention to position sizing and risk management.
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