Sinolink: Companies with a favorable cost curve and a clear path to production delivery are given a "Buy" rating in the resource sector.

Sinolink released a research report stating that it is optimistic about resource companies that rely on resource endowments, technological or energy advantages to be long-term positioned on the left side of the cost curve, with clear paths to production fulfillment. It also favors commodities that are directly priced based on monetary demand and have relatively low supply elasticity, giving the sector a "Buy" investment rating. Attention should be paid to leading copper and gold resource companies on the left side of the cost curve, electrolytic aluminum with energy cost advantages, and gold, which is directly priced based on monetary demand. Key points from Sinolink are as follows: The first principle of price formation is always supply and demand balance. Commodity prices may seem to have many explanatory frameworks: supply-demand gaps, cost support, monetary environments, and trading sentiment. However, when these factors are broken down layer by layer, it becomes clear that any force aiming to sustainably influence prices must ultimately alter supply and demand; there is no way around it. The supply and demand balance sheet, cost curve, and complete supply and demand curve each retain different dimensions of commodity research. The balance sheet is adept at describing supply, demand, inventory, and internal structure along a timeline, but struggles to show how high-cost production capacity, inventory release, delayed purchases, and potential demand would be activated following price changes. The cost curve reveals the costs and release thresholds of different supply entities, making marginal supply and price feedback visible. The complete supply and demand curve further restores the willingness to pay demand, allowing both buyers and sellers to enter pricing collaboratively. If one wishes to retain both the temporal evolution capability of the supply and demand balance sheet and the pricing explanatory capability of the supply and demand curve simultaneously, a more ideal research framework would be to dynamize the static supply and demand curve: forming corresponding supply curves, demand curves, and equilibrium points for each period. The supply curves of resource products have physical and factor attributes, while the core of demand curves is the willingness to pay at the end-use. Resource endowments determine ore grades, mining methods, handling volumes, and base costs; transport converts resources from different regions into the competitiveness of landed costs at consumption sites, with its importance varying according to unit value, volume, and demand concentration; energy represents the cost of material conversion, resulting in energy-intensive, low-value commodities like electrolytic aluminum showing strong energy attributes. Only by carefully breaking down these conditions item by item can we identify the true marginal supply. Demand for resource products is usually derived demand. For instance, in the case of lithium carbonate, how high of a raw material price direct downstream consumers can accept ultimately depends on whether costs can be transmitted to end users such as automobiles, consumer electronics, and energy storage projects, as well as whether consumer budgets, corporate profits, and project returns can continue to absorb those costs. As raw material costs are diluted by technology, branding, labor, channels, and other components layer by layer, the demand curve for resource products tends to be steeper; however, the threshold for different products, regions, and projects varies, and only by aggregating these heterogeneous endpoints can we obtain the total demand curve. Common narratives in the market, such as financial attributes and cost support, can often be reduced to supply and demand variables. The uniqueness of gold lies not in its separation from supply and demand, but rather in the fact that its functions as a store of value, safe haven, and reserve inherently are its terminal functions; actual interest rates and fiat currency credit will directly affect monetary demand, and short-term mineral supply is relatively inelastic, hence demand changes can readily amplify into price changes. Industrial resource products may be influenced by interest rates, the U.S. dollar, financing, and risk appetite, but financial conditions are more a transmitter and amplifier of their own physical supply and demand trends. Costs do not necessarily affect commodity prices; only when cost changes surpass the activation or shutdown threshold of marginal capacity will they impact final prices. The cases of iron ore and scrap steel illustrate that the most watched or largest supply does not necessarily determine prices; the real switches often lie with the marginal entities that fill the last unit gap. Important distinctions in this article. The shortage reflected in the supply and demand balance sheet is often not a real shortage in the true sense. Prices do not necessarily become less responsive as they rise; in fact, once demand surpasses the critical value for total supply, prices may accelerate. The negative feedback response pattern of demand to rising commodity prices does not mean that all demand sectors vanish in succession. Lower interest rates are not a sufficient condition for indiscriminate increases in industrial resource products. Rising costs do not automatically equate to price support. The actual linkage mechanism of the premium between high-quality scrap and low-quality scrap is not merely cost support. Risk warnings. Risks related to macroeconomic conditions and final demand falling short of expectations. Risks of supply release and marginal capacity changes exceeding expectations. Risks associated with energy, transportation, exchange rates, and geopolitics.