Guotai Haatong: Metal Sector as a Whole Will Maintain Volatile Uptrend; Subdivisions Display "Multiple Blooming" Structural Characteristics

Guotai Haitong releases a research report stating that the metal industry maintains a “volatile upward trend,” with multiple points of growth demonstrating independent logic. This round of market movement differs significantly from historical cycles. The industry’s core pricing drivers are shifting from traditional demand driven by real estate and infrastructure to a structural demand reshaped by “New Energy + AT” and the resonance of rigid supply-side constraints. The five major metal sectors each have independent industrial logic, showing a “multi-point flowering” structural characteristic. The bank believes that the overall sector will continue to trend upward with fluctuations.

Guotai Haitong’s main views are as follows:

Precious Metals: Driven by Geopolitical Risk and Inflation Concerns

In the context of frequent geopolitical conflicts in the Middle East and other regions, the safe-haven attributes and inflation worries are the main short-term drivers of gold prices. Currently, the valuation of the gold sector remains relatively low, and the bank considers that every pullback is a good opportunity for strategic positioning.

Industrial Metals: Demand Structure Reshaping, Tightening Supply and Demand Balance

The bank believes that the cycle span of industrial metals may exceed market expectations. Structural changes on the demand side are driven by new energy and A-shares development (grid upgrades, data centers); on the supply side, rigid constraints include declining mineral grades, increased geopolitical risks, and insufficient capital expenditure. Copper: Disruptions from Congo floods combined with strong demand from A-shares and power grids have led to an expected supply-demand gap of over 200,000 tons this year, indicating a tight balance. Aluminum: Recent price increases are mainly driven by supply chain concerns caused by Middle East geopolitical conflicts, and the sector’s valuation is currently low, with high dividend yield characteristics.

Strategic Metals: Rigid Era Begins, Highlighting Resource Scarcity

Rare Earths: This round of market movement has completely shifted from demand penetration logic to pure supply-driven factors. Domestic rare earth quotas have significantly slowed, coupled with regulations on gray production and the implementation of whitelist systems. The industry is shifting from extensive expansion to refined management. Industry chain profits are expected to transfer to midstream smelting and separation, with a significant increase in concentration. Natural Uranium: As a highly rigid strategic resource supply, and with increased nuclear power demand driven by A-shares, the supply gap will be significantly enlarged. Long-term, prices are expected to continue rising.

Energy Metals and Steel: Fundamentals Bottoming Out, Structural Opportunities to Be Seized

Energy Metals: The bank believes that the fundamentals of lithium carbonate are strong, with continuous destocking. Coupled with policy disruptions such as Jiangxi’s license renewal and overseas Zimbabwe embargoes, there are substantial structural trading opportunities within the year. Steel: The industry bottom has become clear, but the subsequent upward potential and space mainly depend on substantive policy interventions to curb industry overcompetition and the elimination of excess capacity at the tail end.

Risk Warning: The pace of Federal Reserve rate cuts falling short of expectations, unexpected macroeconomic demand fluctuations, etc.