SunSirs: Nonferrous Metals Surge Over 75% Year-to-Date; U.S. Rate Cut Cycle Boosts Market Outlook

Nonferrous metals have delivered standout performance this year, with copper, gold, lead, and zinc leading gains. Industrial metals have been the primary driver of the sector's rally.

Against a backdrop of global macro liquidity easing, base metals have demonstrated prominent medium-to-long-term allocation value due to their supply-demand rigidity, safe-haven attributes, and green transition demand. Copper, aluminum, and gold are particularly favored. Priority should be given to leading enterprises with core mining rights, with a focus on targets possessing deep processing capabilities.

Within the sector, a structural market trend has emerged, with industrial metals leading gains and serving as the primary driver of the sector's rise.

Funding-wise, market sentiment remains robust. Following the Fed's expected 25-basis-point rate cut on December 11, non-ferrous metals-related ETFs have seen consecutive days of net capital inflows.

Allocation Value Emerges

Since the Fed initiated its rate-cutting cycle in September, prices for copper, aluminum, tin, and gold have strengthened in tandem. Macroeconomic liquidity easing combined with risk-averse sentiment stemming from geopolitical conflicts has significantly bolstered nonferrous metal prices.

Against the backdrop of heightened global macroeconomic volatility and escalating geopolitical tensions in the fourth quarter, base metals have emerged as core medium-to-long-term asset allocation targets. This is driven by their supply-demand rigidity, policy dividends countering market saturation, and safe-haven attributes.

Beyond macro tailwinds, fundamental factors also provide robust support for base metal prices. On the supply side, industrial metal inventories are currently at historical lows, with supply constraints becoming increasingly prominent. Data from China Post Securities indicates that for copper, global refined copper inventories have been steadily declining. As of November 30, global ending inventories stood at 1,451 thousand tons, reaching a 35-year low. Furthermore, copper production capacity has been constrained by output reductions at Indonesia's Grasberg mine and production disruptions at Chilean copper companies.

For aluminum, capacity utilization rates for primary aluminum are nearing full production limits. On December 11, mainstream social stockpiles of primary aluminum stood at 584,000 metric tons, a historically low level supporting price resilience.

Regarding tin, the evacuation of foreign nationals from Myanmar's Bisie mine has heightened expectations of supply chain disruptions, while production in Nigeria's tin-producing regions has also faced disturbances.

On the demand side, amid the broader green transition trend, new energy vehicles and AI computing infrastructure construction have emerged as new growth drivers for copper and aluminum consumption. Data from Dongxing Securities shows that in the first three quarters of 2025, copper demand for new energy vehicles and charging piles grew significantly. China's apparent copper consumption increased by 8% year-on-year, while copper product output rose by 14%, driving an upgrade in copper consumption structure.

Aluminum is accelerating its penetration under the “aluminum substitution for copper” trend, with sustained demand release in sectors like air conditioner heat exchangers and new energy vehicle battery trays, driving aluminum consumption resilience beyond expectations.

Institutions Favor Copper, Aluminum, and Gold

Under the premise of macroeconomic easing, the long-term allocation logic for non-ferrous metals remains solid.

With production cuts expected from major copper miners Freeport and Teck Resources, copper supply-demand dynamics may tighten by 2026. Aluminum demand remains resilient in new energy and power sectors, with prices likely to recover alongside copper. Short-term supply disruptions for tin persist, keeping prices elevated. Precious metals benefit from Fed rate cuts and de-dollarization trends, offering substantial upside potential.

As the “lifeblood” of the green economy, copper faces limited new capacity due to prolonged global capital expenditure slumps in mining, while surging demand from new energy and AI data center construction will widen the global copper supply-demand gap to 800,000 tons by 2025. Aluminum's green electricity attributes will command a premium in the carbon tariff era, making hydropower-based aluminum producers attractive for long-term allocation. Regarding gold, amid geopolitical tensions and weakening U.S. dollar credibility, central banks have maintained net gold purchases for 18 consecutive months, positioning gold prices to potentially reach new highs.

Investment strategies should prioritize leading enterprises with core mining rights, with a focus on targets possessing deep processing capabilities.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.