China Securities Co., Ltd.: The long-term allocation logic of copper, aluminum, and gold is clear. Focus on investing in three main themes.

China Securities Co., Ltd. released a research report stating that since the fourth quarter, the escalation of global macroeconomic and geopolitical uncertainties has highlighted the investment value of strategic mineral resources in terms of security and price elasticity. Based on the current supply and demand situation, policy orientation, and industry trends, the logic for long-term allocation of copper, aluminum, and gold is clear. Copper benefits from tight supply at the mining end and demand driven by GREEN ECONOMY; aluminum is limited by domestic production capacity constraints and benefits from lightweighting and green electricity demand; gold has unique attributes for hedging risks and inflation. Investment should focus on three main themes: first is supply rigidity, focusing on varieties significantly constrained by resource constraints and capacity policy restrictions; second is green demand, seizing structural growth brought about by the energy transition in new energy vehicles, photovoltaics, wind power, etc.; third is financial attributes, utilizing changes in liquidity expectations to allocate assets for hedging. The main points of China Securities Co., Ltd. are as follows: Copper: Three positive factors resonate, ushering in a "super cycle" Supply shortages intensify. Global copper supply disruptions are frequent: Chile's Codelco will significantly raise long-term premiums in 2026, confirming the scarcity of resources; the incident at the Grasberg mine in Freeport and the Kamoa copper mine in the Congo further tighten supply. Domestic smelting capacity actively shrinks, with the China Smelters Purchase Team (CSPT) reaching a consensus to reduce production by more than 10% in 2026, processing fees (TCRCs) have at times approached zero or negative values, forcing industry consolidation. In terms of inventory, international copper inventories as well as SHFE copper inventories are decreasing, with domestic inventories accelerating clearance, and the supply-demand gap continues to widen. Structural growth on the demand side. GREEN ECONOMY and AI infrastructure are new drivers: demand for copper in areas such as photovoltaics, wind power, and new energy vehicles continues to rise; the U.S. "Guangdong Create Century Intelligent Equipment Group Corporation mission" plan is driving global data center construction, combined with aging upgrades in the power grid and other traditional demand resilience, supports long-term growth in copper consumption. Macro and policy positives. The probability of a rate cut by the Federal Reserve in December is increasing, the weakening of the U.S. dollar alleviates the financial pressure on copper prices; strict control of new production capacity domestically, and promotion of industry technological upgrades, may lead to an increase in market share for leading companies. Additionally, stricter environmental approvals for mines and potential trade frictions may further strengthen supply constraints. Aluminum: Green transformation and supply rigidity Supply constraints are strengthening. Domestic electrolytic aluminum production capacity is locked at 45 million tons per year, with production restrictions during Yunnan's dry season becoming common, and new production capacity can only be obtained through replacements. Overseas supply risks are on the rise: French aluminum smelters may reduce production due to high electricity costs, and the accident at the Grundartangi aluminum plant in Iceland exacerbates global circulation resource shortages. Industry consolidation is accelerating (such as Shandong Hongchuang Aluminium's acquisition of Hongtuo Industries), highlighting the scarcity of high-quality production capacity. Demand driven by dual engines. Explosive growth in new energy fields: the amount of aluminum used in single new energy vehicles is increasing, integrated pressure casting technology is becoming more popular, and demand for aluminum in the photovoltaic industry is increasing with the production expansion of TOPCon batteries. Resilience still exists in traditional areas: grid investment drives an increase in aluminum cable start-up rates, and ultra-high voltage construction provides support. Export structure optimized: the EU Carbon Border Adjustment Mechanism (CBAM) is driving a surge in demand for certified green electricity aluminum, and the order cycle for low-carbon qualifications companies is lengthened. Policy and liquidity resonance. The ten departments' "Implementation Plan for the High-Quality Development of the Aluminum Industry" clearly stipulates a target of 30% clean energy usage and 15 million tons of recycled aluminum production by 2027; policy expectations are heating up in the opening year of the "Five-year Plan", and new urbanization and village renovation will support demand. With expectations of a rate cut by the Federal Reserve, the financial attributes of aluminum have strengthened. Gold: Short-term fluctuations do not change long-term allocation value Financial attributes strengthen. The probability of a rate cut by the Federal Reserve in December exceeds 80%, the U.S. dollar index falls below 102, and the hedging and inflation-resistant properties of gold are highlighted. The CME FedWatch tool shows that the market has largely priced in expectations of a rate cut, and expectations of a decline in real interest rates support the price of gold. Positive policies and funding. The new gold tax policy in China has been implemented: the input tax deduction rate for non-investment gold (such as gold jewelry) has been reduced from 13% to 6%, while the tax preferences for investment gold (standard gold bars, gold ETFs) are retained, accelerating the transition of funds to standardized products. Central bank gold purchases continue: by the end of October, China's central bank gold reserves reached 74.09 million ounces (continuously increasing for 12 months), with central bank gold purchases accounting for over 20% of demand. Hedging demand and scarcity. The silver inventories of the Shanghai Gold Exchange and Shanghai Futures Exchange are at their lowest levels in nearly a decade, highlighting the scarcity of physical assets; continued geopolitical conflicts are fueling risk aversion. Investment advice: It is recommended to focus on leading copper companies with resource reserves and cost advantages, as well as smelting and processing enterprises that benefit from the rise in copper prices; aluminum companies with green electricity support and advanced low-carbon processes, and leading companies in the recycling aluminum industry chain; gold ETFs, gold mining stocks, and leading companies with the ability to increase reserves.