Huayuan Securities' 2025 Non-ferrous Metal Strategy: "Aluminum" Shines Brilliantly, Gold Bull Market

2025+2.0+25 Aluminum may shift from shortage to surplus in the short term, with an additional capacity of 13.2 million tons in 2025 (expected effective production of about 5.45 million tons), which can meet the demand for electrolytic aluminum of about 2.87 million tons. Long-term outlook for aluminum may trend downward, with a turning point possibly in April 2025. As the shortage at the mining end gradually transmits to the metal end, demand continues to grow with the rapid increase in demand for new energy sources such as wind power, photovoltaics, and new energy vehicles, the copper demand continues to grow. The supply and demand turning point of the copper industry may be imminent, with the supply and demand balance projected to be 180,000, -660,000, and -1,030,000 tons, respectively, in 2024-2026, and the copper price is expected to reach new highs. Key views of Huayuan Securities are as follows: Gold: Multi-factor disturbances do not change the long-term bullish logic, gold enters the left-side layout range The retracement of the gold price in November 2024 was mainly due to the landing of the US presidential election, expectations, and short-term economic data catalysis. The current gold price may have partially or completely reflected the corresponding marginal changes, with the bottom range now visible. The logic of gold price upward trajectory remains unchanged, with the double main line of "interest rate cut trading" + "Trump 2.0" expected to continue to catalyze. On the other hand, under the background of protectionism and great power game, the central bank's increased reserves have formed strong bottom support for the gold price. In the short term, the disturbance of the Fed's interest rate cut expectations in 2025 and the inflation expectations driven by Trump's trade policy after taking office may dominate the short-term trend of gold prices. In the long term, under the dual loose monetary and fiscal policies in the United States, the US dollar credit contraction and de-dollarization, gold is still expected to have upward potential in the medium to long term. Recommendations: Leading stock-Shandong Gold Mining (600547.SH); Valuation repair resilience stocks-Chifeng Jilong Gold Mining (600988.SH), Zhongjin Gold Corp.,Ltd (600489.SH), Shanjin International Gold (000975.SZ); Asset injection expected stocks-SEC Electric Machinery (603988.SH).There are two types of lead: primary lead and secondary lead. The production of secondary lead has remained stable, while primary lead is mostly associated with lead-zinc. Due to a decrease in the supply of zinc ore, the production of primary lead dropped in September 2024, with monthly production remaining low in the first half of the year. As a result, the supply and demand balance of refined lead has shifted towards a shortage, leading to a continuous increase in the price of lead concentrate. The decrease in supply of zinc ore has also caused a decline in processing fees for zinc ingots.Lithium: Excess narrowing, lithium price center in 2025 may be at 80,000 During the continuous decline in lithium prices, there have been constant closures of high-cost lithium mines, and the clearance of the lithium industry continues. The marginal growth rate of lithium supply has weakened somewhat, with the expected lithium salt supply corresponding to lithium mines reaching 1.51 million tons of LCE in 2025, a year-on-year increase of 15%. Under the policy of replacing old with new, electric vehicle demand may exceed expectations, with expected demand for lithium carbonate reaching 1.43 million tons in 2025, a year-on-year increase of 19%. Taking into account inventory and recycling output, we expect an excess of 126,000 tons of lithium carbonate in 2025, with an excess ratio of 9%, and the excess narrowing. Based on the full cost curve and supply-demand balance sheet, we expect the center price of lithium carbonate in 2025 to be 80,000 yuan/ton, with limited rebound height and downward space. Recommendations: 1) Undervalued targets with a second growth curve: Sichuan Yahua Industrial Group (002497.SZ) (civil explosives), Sinomine Resource Group (002738.SZ) (copper + minor metals); 2) Targets that still have potential for lithium self-sufficiency and cost reduction: Sichuan Yahua Industrial Group, Ganfeng Lithium Group (002460.SZ), Yongxing Special Materials Technology (002756.SZ), Sinomine Resource Group. Metal new materials: Changes in AI+technology+automobile terminal business conditions, enabling metal new materials to cross the cycle to enjoy growth Rare earth permanent magnets: Resonance in demand for electric vehicles and Siasun Robot&Automation, the industry's profit margin improvement as it crosses the cycle. On the demand side, rare earth permanent magnets are important materials for high-performance electric motors, with the proportion of demand from new energy vehicles continuously increasing as the main DRIVE. Wind power demand is expected to bottom out and recover, and industrial and humanoid Siasun Robot&Automation potential demand is expected to enter a growth period. On the supply side, the slowing growth rate of quotas will gradually improve the supply side, with rare earth oxides and magnetic material prices expected to bottom out and rebound in mid-2024, leading the industry to cross the cycle and reach a profit turning point. Soft magnetic materials: AI industry empowers second-stage growth, automobile platforms carry emerging industry trends. High-performance soft magnetic materials are core materials for inductors and transformers, with the advantages of high-frequency and low loss matching the trend of high power density in electronic and power industries. Soft magnetic materials represented by alloy soft magnetic powder cores (chip inductors), carbonyl iron soft magnetic materials (magnet fluid intelligent suspension), and amorphous alloy (amorphous automotive motors) are breaking through from 0 to 1 in new terminal applications. Powder materials: Fine powder applications continue to open up, with multiple blossoms in consumer electronics+AI+photovoltaics. Making powders "fine" achieves higher gross margins and terminal quality, matching demand for electronic components, structural parts, and metal substitution. MIM technology is widely used in consumer electronics, and the foldable screen hinge drives its business cycle. Copper-based powder materials are widely used, with demand for AI heat dissipation devices driving new applications of thermal copper powders. Photovoltaic silver paste cost reduction demands are urgent, opening up the imagination space for silver-coated copper powders and nano-copper powders. Alloy materials: Aluminum thermal materials remain strong, the space for lightweight magnesium alloys is extensive, and high-end copper alloys are being mass-produced. New energy vehicle usage of aluminum thermal materials has doubled, with the industry actively expanding production to continue verifying its high business cycle. The advantages of magnesium alloy lightweighting, shock resistance, and heat dissipation match the demand for lightweighting, shock resistance, and heat dissipation in new energy vehicles. With the downward trend in magnesium prices, there is a potential for a track-like position in large automotive applications. High-end copper alloys establish themselves in emerging application scenarios, with high-strength and high-conductivity copper alloys enjoying the business cycle of automotive connectors, and copper-tungsten alloys (liner materials for rocket fuel chambers) entering the trillion-dollar commercial aerospace industry track. Risk Warning The risk of U.S. inflation exceeding expectations, the risk of continued rate hikes by the Federal Reserve; the risk of unexpected release of additional production capacity, the risk of copper ore grades exceeding expectations; domestic downstream real estate and other demand below expectations, overseas electrolytic aluminum production capacity release exceeding expectations. Risks of new energy vehicle and AI demand falling short of expectations downstream.