Central China: Maintain "Outperform" rating on the non-ferrous metals and new materials industry. We recommend focusing on the copper, aluminum, gold, and superhard materials sectors.

Central China released a research report stating that, against the background of tight supply of copper concentrate and the explosion of green demand, the center of copper prices is expected to maintain an upward trend. The bank predicts that the average price of electrolytic aluminum in 2026 will be around 22,000 yuan per ton. At the same time, as the profitability of electrolytic aluminum companies continues to increase, companies have been increasing their dividend payout ratios, leading to an increase in dividend yield, and the sector has dividend attributes. With the Fed entering a rate-cut cycle, a series of favorable domestic policies taking effect, the economy maintaining a positive momentum, and increased demand for non-ferrous metals at home and abroad, the bank maintains a rating of "outperforming the market" for the non-ferrous metals and new materials industry and recommends paying attention to the copper, aluminum, gold, and superhard materials sectors. The main points of Central China are as follows: Copper: Supply-demand contradictions are evident, and the price center is shifting upward. As the "new gold" of the new era, copper's strategic value is increasingly prominent against the backdrop of the China-US trade friction. On the supply side, the declining global copper ore grade, limited new mine projects due to long-term insufficient capital expenditure, and increased disturbances at the mine end collectively restrict supply growth, leading to a sustained tightness in the copper concentrate market. On the demand side, benefiting from the global loose monetary cycle and the green transformation trend, demand for copper in areas such as electricity investment, new energy vehicles, and data center construction forms strong support. Against the background of tight supply of copper concentrate and the explosion of green demand, the center of copper prices is expected to maintain an upward trend. Based on the scarcity of resources and the position in the industrial chain, it is recommended to focus on leading companies with abundant reserves and clear production capacity, such as Zijin Mining Group (601899.SH) and CMOC Group Limited (603993.SH). Aluminum: Tight supply-demand for electrolytic aluminum, the industry maintains high prosperity. On the supply side, domestic capacity is limited by the "ceiling" constraint of 45 million tons, operating capacity is at a high level, and new capacity is extremely limited; although there are plans for overseas capacity, the progress of production is generally slow. The demand side shows structural resilience. With the combined effects of supply rigidity, low inventories, and cost support, the price of electrolytic aluminum is expected to be easy to rise and difficult to fall, and the industry is expected to maintain a relatively high level of prosperity. The bank predicts that the average price of electrolytic aluminum in 2026 will be around 22,000 yuan per ton. With the continuous enhancement of the profitability of electrolytic aluminum companies, companies have been increasing their dividend payout ratios, leading to an increase in dividend yield, and the sector has dividend attributes. It is recommended to continue to focus on leading green aluminum companies such as Yunnan Aluminium (000807.SZ), leading aluminum processing companies like Henan Mingtai Al.Industrial (601677.SH), and leading electrolytic aluminum companies and industrial chain integration exemplary enterprises like Henan Shenhuo Coal & Power (000933.SZ). Precious metals: Gold allocation value highlighted, silver price elasticity prominent. Against the background of the Fed's monetary policy shift, pressure on the dollar credit system, and continued global macroeconomic uncertainty, the value of gold allocation is highlighted. Silver, as a precious metal with industrial and monetary attributes, shows stronger price elasticity in a period of loose liquidity. As of November 2025, the gold-to-silver ratio had fallen from around 100 in May 2025 to around 80, but compared to the long-term average level, there is still room for downward correction. It is recommended to focus on investment opportunities in the following leading companies: Zijin Mining Group (601899.SH), a leading company in the non-ferrous metal industry with leading control of metal ore resources; Shandong Gold Mining (600547.SH), a core target in the gold sector; Zhongjin Gold Corp., Ltd (600489.SH), a gold mining company listed domestically controlled by central enterprises; and Shengda Resources (000603.SZ), a leading company in silver reserves and extraction capacity. Superhard materials: Contraction in traditional sectors, rise of functional diamonds. Traditional superhard product demand is under pressure, and the industry is entering a downturn. However, continuous breakthroughs in functional diamond technology have opened up new growth opportunities for the industry. In particular, functional diamond/copper composite materials for high-end chip heat dissipation are widely regarded as a key development direction and potential growth point in the short term. It is recommended to focus on companies with deep accumulation in the field of functional diamonds and small-scale sales of diamond heat sinks, such as Sinomach Precision Industry Group (002046.SZ), and Sf Diamond Co., Ltd. (300179.SZ), which have early layouts and large-scale CVD diamond production lines. Risk Warning: (1) Unexpected Fed rate hikes leading to metal price declines; (2) Global economic recession leading to insufficient downstream demand; (3) Unexpected impact of mine production supply on metal prices; (4) Delayed progress in the development of functional diamonds; (5) Significant fluctuations in raw material prices; (6) Impact of geopolitical conflicts; (7) Lower-than-expected demand for copper, aluminum, and other ores; (8) Manufacturing growth not meeting expectations.