Galaxy Securities: Local congress policy signals are positive, expected to boost demand for colored metals.

Galaxy Securities released a research report stating that local two sessions have continued the policy orientation of the Central Economic Work Conference. Under the guidance of a more proactive fiscal policy, the "dual focus" construction will accelerate, and the development of key strategic mineral resources will receive more policy and funding support. Leading companies in the non-ferrous industry will significantly benefit from their resource reserves and integration capabilities. Accelerated investment in infrastructure, continued replacement of old products with new ones in the consumer goods sector, and stabilization of the real estate market will also drive up demand for non-ferrous metals such as copper and aluminum, supporting the upward trend in prices of non-ferrous metal commodities. On the other hand, local governments are speeding up the development of new high-quality productive forces and cultivating new advantages in industries. The improvement in material performance requirements driven by innovation in emerging industries will promote the application of new non-ferrous metal materials. Event: Starting from the middle to late January 2025, 31 provincial-level administrative regions across the country will successively hold their two sessions, clarifying the industrial development ideas and annual work priorities for 2025 in accordance with the spirit of the Central Economic Work Conference. Utilizing the "dual focus" policy to promote major project construction: At the 2025 two sessions, local governments will focus on expanding effective investment, especially pushing forward major project investment. The scale of major project investments disclosed by local governments for 2025 is 12.2 trillion yuan, an increase of 296.76 billion yuan from 2024. Furthermore, local governments have proposed to actively seek support from the "dual focus" policy, central budget funds, and special bond quotas. The emphasis on "mega infrastructure" will become more prominent. With various regions intensifying efforts to stabilize investment, investment in infrastructure will drive the demand for upstream non-ferrous metals such as copper and aluminum. On the other hand, the accelerated construction of "dual focus" will receive more policy support and funding, benefiting the development of key strategic mineral resources such as copper, aluminum, gold, and lithium, which are in short supply domestically and essential in the future. Leading companies in the non-ferrous industry with substantial reserves of resources and integration capabilities will be the biggest beneficiaries, with their development speed and growth potential expected to reach new heights. Strengthen the implementation of the replacement of old products with new ones policy, boost consumption: Local government two sessions responded to the call from the central government, making boosting consumption the "top priority" for 2025. Many local governments mentioned implementing special actions to boost consumption, with provinces such as Hebei, Zhejiang, Guangdong, Hainan, Henan, Hunan, Inner Mongolia, Sichuan, Liaoning, and Heilongjiang all proposing to continue strengthening the implementation of policies to replace old consumer goods with new ones to stimulate consumption. Significant results were achieved in the replacement of old consumer goods in 2024, with over 6.8 million vehicles replaced under the automobile replacement policy (with a 47.6% penetration rate for new energy passenger vehicles) and over 62 million units of eight major categories of household appliances sold. It is estimated that the replacement of old consumer goods drove the consumption of copper and aluminum by 470,000 and 1.31 million tons, respectively. In 2025, expanding the scope of implementing policies to replace old consumer goods will further stimulate consumption vitality and drive continuous improvement in demand for upstream metals such as copper and aluminum. Optimize real estate policies to stabilize the real estate market: Various local governments proposed a series of new measures and tasks related to stimulating demand, improving supply, and revitalizing the real estate market at the two sessions. These measures focus on urban village renovation, dilapidated housing renovation, affordable housing construction, aiming to consolidate the momentum of stabilizing and recovering the market, build a new development model for the real estate industry, and promote the stable and healthy development of the real estate market. Real estate is an important downstream application area for non-ferrous metals. According to statistics from SMM and Steelhome, the real estate sector and its industry chain account for 22% of domestic copper demand and 23.9% of domestic aluminum demand. In 2024, copper and aluminum consumption in the construction sector decreased by 4% and 5% year-on-year, respectively. With policy support stabilizing the real estate market, new construction and completion in the real estate sector in 2025 may improve, enhancing future demand for non-ferrous metals in the real estate industry chain. Shaping new dynamic new advantages for development, significant potential for metal new materials: Based on the deployment of various local two sessions, the path for developing new high-quality productive forces and fostering new dynamic new advantages is becoming clearer. Various regions have proposed to focus on nurturing emerging industries such as artificial intelligence, Siasun Robot&Automation, low-altitude economy, integrated circuits, new energy vehicles, high-end equipment, and new materials. We believe that new materials applied in digital information, such as AI chips, upstream metal soft magnetic core powder, gallium arsenide, and indium phosphide in the optoelectronics module industry, solid-state battery materials such as zirconium oxide in the new energy vehicle sector, and high-performance magnetic materials that enhance the efficiency of Siasun Robot&Automation, will inject momentum into innovative development for high-quality growth.