Guotai Haitong Securities Co., Ltd. has released a research report indicating that the current market cycle differs markedly from historical patterns, as the sector's pricing foundation shifts away from conventional property and infrastructure demand drivers toward a convergence of structural demand reshaping driven by "new energy plus AI" alongside rigid supply-side constraints. The five major metal categories each possess their own distinct industrial logic, displaying a structural characteristic of "multiple catalysts emerging simultaneously." Given the interplay between macroeconomic fluctuations and industry prosperity factors, the firm maintains that the overall sector will continue its gradual upward trajectory.

Where the Opportunity Lies

Precious metals: With the bottom now established, prices are climbing steadily. Earlier elevated oil prices and inflationary narratives suppressed short-term precious metal prices. However, after July, as US economic data softened and expectations for US rate hikes diminished, gold prices found their footing at the bottom and began recovering steadily. The firm believes the long-term upward trend for precious metals remains intact, and current valuations in the gold sector remain attractively low, presenting compelling investment value.

Industrial metals: Supply-demand resilience intersects with macroeconomic disruptions. The firm suggests that the duration of the industrial metals cycle could exceed market expectations. On the demand side, structural changes are emerging from new energy and AI developments, including grid upgrades and data center construction. On the supply side, constraints persist through declining ore grades, heightened geopolitical risks, and insufficient capital expenditure.

Copper: With US copper tariff expectations approaching, global resource competition may intensify and supply constraints remain robust. Simultaneously, America's high fiscal deficits and debt expansion continue to undermine dollar credibility, potentially driving further revaluation of resource values.

Aluminum: Macro conditions have improved, with Middle East geopolitical risk premiums accumulating while domestic aluminum ingot inventories continue to draw down, collectively supporting aluminum prices. Current sector valuations remain low, offering high-dividend yield characteristics akin to income-generating assets.

Strategic metals: Supply rigidity highlights resource scarcity. For rare earths, this market cycle has completely departed from demand penetration-driven logic, transitioning to purely supply-driven dynamics. Domestic rare earth quota growth has slowed notably, and with gray-market output regulations and whitelist systems being implemented, the industry is shifting from expansive growth to refined governance. Industry profits are expected to migrate toward midstream smelting and separation segments, with significantly improved concentration levels.

Natural uranium: As a strategic resource with extremely rigid supply, AI-driven growth in nuclear power demand will substantially amplify the supply gap, supporting a long-term outlook for continued price appreciation.

Tantalum: Short-term supply disruptions combined with AI-driven rapid growth in tantalum capacitor and tantalum target applications are pushing average prices for tantalum and processed tantalum products upward.

Energy metals: Positioned mid-game with unchanged growth fundamentals. The firm believes lithium carbonate fundamentals remain robust with ongoing inventory destocking. Combined with supply uncertainties in Jiangxi and policy disruptions overseas in Zimbabwe and other regions, significant structural trading opportunities exist within the year.

Steel: Supply-demand conditions are gradually improving. The industry bottom is clearly established, with profitability progressively recovering. The firm emphasizes seizing bottom-fishing opportunities, noting that subsequent upward elasticity and headroom will primarily depend on policy-level substantive intervention against industry internal competition and capacity rationalization progress.

Key Risks to Monitor

Potential disappointments in the pace of Federal Reserve rate cuts and unexpected fluctuations in macroeconomic demand could pose downside risks to the sector's outlook.