Guotai Haitong: The uptrend in precious metals may continue under the long-term trend of "de-dollarization".

Guotai Haitong released a research report stating that, under the long-term trend of "de-dollarization," the drive to reduce the proportion of U.S. bonds in foreign exchange reserves and to increase holdings of gold in some countries continues. This trend remains strong and is not weakening with the easing of trade disputes between China and the U.S. The liquidity loosening brought about by the Federal Reserve's interest rate cuts has accelerated this process to some extent, leading to an increase in precious metals in 2025 under the combined effects of these two trends. As we enter 2026, with the backdrop of the mid-term elections in the US, the actions of the new Federal Reserve Chairman to cut interest rates may be more aggressive, and European and American investors are likely to continue to increase their holdings in gold ETFs. The bank believes that the rise in precious metals will continue. Guotai Haitong's main points are as follows: Copper: Resonance of dual attributes, copper prices may run strong; Aluminum: Global electrolytic aluminum is expected to be in tight balance, pushing aluminum prices higher. In 2026, the liquidity loosening brought about by the Federal Reserve's interest rate cuts and the rise in physical demand from AI investments jointly stimulate the demand for base metals. Basic metals, represented by copper and aluminum, are constrained in terms of mining and smelting, and the bank expects a steady increase in the price center of industrial metals. Copper: As we enter 2026, the trend of gradually loosening liquidity at home and abroad remains unchanged. The potential demand for copper from AI data centers and the power grid is significant, the supply-demand contradiction in copper mines persists, and the price center of copper will continue to rise. There is also the possibility of an unexpected increase. The valuation of the copper sector is relatively low, and the bank recommends actively allocating assets in this sector. Aluminum: The tight supply-demand balance in the industrial chain continues. The bank believes that electrolytic aluminum companies are expected to maintain good profit levels and possess dividend-generating assets. At the same time, leading aluminum companies, by virtue of their layout and extension in the resource sector, are expected to maintain good profit levels. Precious Metals: Interest rate cuts in the era of "de-dollarization" The bank believes that under the long-term trend of "de-dollarization," the drive for some countries to reduce the proportion of U.S. bonds in foreign exchange reserves and increase holdings of gold continues. This trend remains strong and is not weakening with the easing of trade disputes between China and the U.S. The liquidity loosening brought about by the Federal Reserve's interest rate cuts has accelerated this process to some extent, leading to an increase in precious metals in 2025 under the combined effects of these two trends. As we enter 2026, with the backdrop of the mid-term elections in the US, the actions of the new Federal Reserve Chairman to cut interest rates may be more aggressive, and European and American investors are likely to continue to increase their holdings in gold ETFs. The bank believes that the rise in precious metals will continue. Energy Metals: High demand growth, returning to tight balance The bank believes that driven by energy storage and power demand, the supply and demand of lithium carbonate will return to a tight balance in 2026, and the lithium carbonate price center will significantly rise. After the independent feasibility of energy storage is proven, the bank expects a significant increase in the landing rate of energy storage bidding projects in 2025. The bank estimates that the demand growth for lithium carbonate brought about by global energy storage in 2026 will be around 50%, while the demand growth for power batteries is expected to be slightly lower at around 20%. Global lithium carbonate demand is expected to increase by 24.2%. On the supply side, taking into account the resumption of production of domestic lithium mica, the commissioning of salt lakes, and the release of overseas production capacity, the bank predicts a supply growth rate of approximately 18.1%. The supply and demand of lithium carbonate will shift from a loose balance to a tight balance, and the lithium carbonate price center will significantly rise. Rare Earth Magnets: The era of rigidity begins, demand blossoms in multiple areas With the rise in the price center of rare earths, domestic rare earth magnet companies are expected to see performance and valuation double. The bank believes that domestic rare earth prices are currently at the bottom of a major cycle and the future price center is expected to continue to rise: 1) On the supply side, the slowdown in the growth rate of domestic rare earth quotas has become the main theme, and the disturbance in Myanmar, an important source of domestic rare earth ore, has not ended, which may further strengthen the rigidity of supply; 2) On the demand side, since 2024, the "two new" policies in China have strengthened the terminal industry cycle, and the bank estimates that the demand growth rates for neodymium iron boron in new energy vehicles/wind power/energy-saving variable-frequency air conditioners in 2025 are expected to reach 29%/18%/28%. Praseodymium and neodymium oxide will maintain a tight balance state. The current domestic rare earth ore may have entered a destocking pace, and stimulated by the rigid replenishment demand overseas after export controls, as overseas rare earth prices transmit to China, the shortage at the ore end is expected to appear, and may amplify the elasticity of price increases, thus, rare earth magnet companies are expected to see performance and valuation double. Risk Warning: The progress of the Federal Reserve's interest rate cuts is slower than expected, unexpected fluctuations in macroeconomic demand, etc.