en.Wedoany.com Reported - The core contradiction in the commodity market is shifting from price fluctuations to the interplay of inventories and supply-demand gaps. Zhongtai Securities believes the market may underestimate the lagged impact of the US-Iran conflict on the supply and demand of oil, copper, and aluminum; while Guotai Junan Securities emphasizes that metal markets will enter a structural primary upward phase after adjustments, with the key being to select varieties with constrained supply but still growing demand.

In a non-ferrous metals weekly report released on June 2, Zhongtai Securities' Liu Yang and team proposed two illusions in the current market: first, that the US-Iran conflict has not led to large-scale supply-demand gaps for commodities like oil, copper, and aluminum; and second, that the momentum for commodity price increases may have exhausted. The institution believes that entering June, with the diplomatic stalemate persisting, irreconcilable differences on nuclear issues, and escalating military friction, the market may face a "turning point." The most direct signals come from inventories and spot premiums. Zhongtai Securities stated that global oil inventories could fall to their lowest since 2017, and the London Metal Exchange (LME) aluminum spot premium has risen to $95 per ton, surpassing the record from March 2022 and approaching a 20-year high. On the copper front, the combined effects of mine-side disruptions, declining smelting fees, and improving demand structure limit the scope for significant price declines.

Guotai Junan Securities' Li Pengfei's mid-term strategy for the metals industry offers another main line: divergence in metal market views is widening. For gold, focus on central bank purchases, ETF inflows, and the US interest rate path; for copper, look at power, AI data centers, and US supply chain policies; for aluminum, consider electrolytic aluminum profits and new energy demand; rare earths, tungsten, tin, and cobalt are more driven by supply constraint trades. The so-called "turning point" does not mean all metals rise simultaneously, but rather a structural revaluation driven by inventories, policies, and demand. Zhongtai Securities pointed out that before the conflict, some aluminum products from the Middle East had just arrived in the US, masking the true tightness of aluminum with inventories. As the inventory buffer continues to deplete, supply-demand gaps for oil, copper, and aluminum may shift from expectations to actual pricing. The LME aluminum spot premium hitting a near 20-year high is an early signal of this process.

Aluminum is one of the varieties with the clearest overlap between the two research reports. Zhongtai Securities believes the sustained rise in the LME aluminum spot premium indicates tightening supply and demand in the European aluminum market, potentially reaching a near 20-year high since January 25, 2007. Domestic exports are also reinforcing this logic. Data from the General Administration of Customs shows that as of April 2026, cumulative exports of unwrought aluminum and aluminum products reached 2.05 million tons, a year-on-year increase of 9.04% and a month-on-month increase of 40.41%. Zhongtai Securities believes that domestic electrolytic aluminum and aluminum processing enterprises may see a simultaneous increase in export volumes and prices. Guotai Junan Securities adds from an industry chain perspective that bauxite and alumina are no longer the tightest links. In 2026, bauxite port inventories are gradually increasing, alumina capacity utilization is declining, and prices remain low, easing upstream raw material constraints. The real elasticity lies in electrolytic aluminum and new demand. Domestic electrolytic aluminum operating capacity and capacity utilization remain high. The Middle East has a total installed electrolytic aluminum capacity of 7.136 million tons, with output of 7.005 million tons, and overseas low-cost capacity is already highly utilized. On the demand side, the real estate chain remains a drag, but new energy vehicles, new solar installations, and energy storage systems are creating new scenarios for aluminum use.

The logic for copper is more complex. Macro variables continue to pressure copper prices. Rising US inflation expectations, heightened rate hike expectations, and higher US Treasury yields may keep copper prices in a range-bound pattern. Supply-side factors provide support. This week, China's copper smelter treatment charges fell to -$106.2 per thousand tons, a decrease of 24.17% month-on-month, with refining charges at -10.62 cents per pound. Rising sulfuric acid prices may transmit to overseas copper smelters, exacerbating concerns about marginal production cuts. Chile's major copper mines saw a year-on-year decline in overall output in March. Peru issued the "Energy Crisis Emergency Decree," and Zambia's copper production in the first quarter fell by 4.27% year-on-year. Guotai Junan Securities defines copper as transitioning from a cyclical metal to a policy-driven metal. US tariffs and supply chain policies are changing the pricing framework for copper. From August 1, 2025, a 50% tariff is imposed on semi-finished copper and "high-intensity copper derivatives," while refined copper is currently mainly covered by a 15% global temporary tariff. The report assumes that if US domestic capacity recovery is not significant by mid-2026, a tiered tariff on refined copper may be initiated from January 1, 2027, starting at 15% in the first phase and rising to 30% in 2028. Copper is being included in discussions on critical minerals and data center supply chains, with the Department of Commerce evaluating items including copper busbars and liquid cooling system components related to AI data centers. Copper is no longer just a metal for construction, appliances, and traditional industries, but a part of power infrastructure and AI hardware. Supply-demand tables show almost no redundancy for copper. Global refined copper supply is projected to increase from 28.53 million tons in 2025 to 29.229 million tons in 2026, 30.719 million tons in 2027, and 32.117 million tons in 2028; global copper consumption is expected to rise from 28.55 million tons in 2025 to 29.47 million tons in 2026, 30.72 million tons in 2027, and 32.00 million tons in 2028, with supply and demand running almost along the breakeven line from 2025 to 2027. The demand structure is also shifting. The share of copper used in power is expected to rise from 45.48% in 2025 to 47.56% in 2028, while copper consumption in data centers is projected to increase from 315,500 tons in 2025 to 689,400 tons in 2028, with its share rising from 1.11% to 2.15%.

The pricing of gold is also changing. Zhongtai Securities believes that interest rates are not the sole determinant of gold pricing. Since the US-Iran conflict, gold has been impacted by liquidity shocks, showing a clear short-term negative correlation with crude oil. Some countries have been forced to sell reserve gold due to short-term fiscal pressures, but the People's Bank of China increased its gold purchases in March when gold prices declined significantly, providing support for the medium to long-term upward trend in gold prices. Rising US inflation expectations have led to a decline in market expectations for a Fed rate cut this year, putting short-term pressure on gold's financial attributes. However, Zhongtai Securities believes that in the medium term, gold's commodity attributes will still benefit from rising inflation, and the uncertainty of the US dollar's reserve currency value continues to drive a revaluation of gold's monetary attributes. Guotai Junan Securities data shows that support for gold no longer comes solely from rate cut trades. In 2025, total gold supply was 5,002 tons, with demand also at 5,002 tons. Jewelry manufacturing demand fell from 2,027 tons in 2024 to 1,638 tons in 2025, but investment demand surged from 1,181 tons in 2024 to 2,175 tons in 2025, with gold ETFs and similar products shifting from net outflows of 6 tons in 2024 to net inflows of 801 tons in 2025. Central bank and official institution gold purchases remain high. These were 1,082 tons, 1,051 tons, and 1,089 tons in 2022, 2023, and 2024 respectively, and are expected to decline to 863 tons in 2025, still significantly higher than most years between 2010 and 2021. Guotai Junan Securities believes that renewed ETF inflows and central bank purchases are raising the floor for gold prices.

Regarding minor metals, Guotai Junan Securities believes that the parts with greater price elasticity are rare earths, cobalt, tin, tungsten, and lithium. These varieties share common characteristics: smaller market sizes and tighter supply constraints. The key for rare earths lies in the declining growth rate of quotas. From 2021 to 2023, the growth rates for domestic rare earth mining quotas were 20.0%, 25.0%, and 21.4%, respectively, while the growth rates for smelting and separation quotas were 20.0%, 24.7%, and 20.7%. By 2024, the growth rate for rare earth mining quotas fell to 5.9%, and for smelting and separation quotas to 4.2%. Rare earth imports in 2025 declined year-on-year. Demand continues to grow. China's demand for NdFeB from new energy vehicles is expected to increase from 69,148 tons in 2025 to 84,866 tons in 2026 and 103,008 tons in 2027; demand from industrial robots is projected to rise from 18,817 tons in 2025 to 28,226 tons in 2026 and 40,927 tons in 2027. Supply-demand balance sheets show that China's praseodymium neodymium oxide supply-demand is expected to have a deficit of 2,917 tons in 2025, 3,306 tons in 2026, and a widening deficit of 9,664 tons in 2027. The tin deficit is more persistent. The global tin supply-demand balance from 2025 to 2028 is projected at -17,600 tons, -17,700 tons, -12,700 tons, and -15,300 tons, respectively. While the absolute deficit size is not large, four consecutive years of deficit are sufficient to keep prices sensitive. Tungsten remains in a tight state. The global primary tungsten supply-demand is expected to have a deficit of 4,598 tons in 2025, 2,538 tons in 2026, and a slight surplus in 2027. Cobalt faces stronger constraints. The Democratic Republic of the Congo accounts for about 76% of global cobalt production. The country has implemented an export quota system, capping total cobalt exports for the 2026-2027 period at 96,600 metal tons, a reduction of approximately 55% compared to actual supply in 2024. Lithium is shifting from surplus to a slight deficit. The global lithium supply-demand balance is expected to move from a surplus of 96,700 tons of lithium carbonate equivalent (LCE) in 2025 to a deficit of 11,000 tons LCE in 2026 and 17,700 tons LCE in 2027. Energy storage is the biggest variable, with demand for energy storage batteries projected to increase from 600 GWh in 2025 to 990 GWh in 2026 and 1,238 GWh in 2027.

The common direction of the two research reports is not a blanket bullish view on all metals. Guotai Junan Securities explicitly points out that nickel remains the most uncomfortable variety in the supply-demand table. Even with tightened mine-side quotas, primary nickel supply still shows a surplus. In 2025, total primary nickel supply is 3.79 million tons, with total demand at 3.552 million tons, resulting in a surplus of 239,000 tons; in 2026, supply is 3.868 million tons, demand is 3.643 million tons, still a surplus of 225,000 tons. Steel is also not a broad-based story. Apparent crude steel consumption remains under pressure, with the focus on high-end steel products, companies with strong performance, dividends, and industry leadership. This also implies that the current focus of non-ferrous and commodity trading is not on chasing a single macro narrative, but on distinguishing three types of assets: oil, copper, and aluminum with rapidly depleting inventory buffers; gold supported by central banks and ETFs; and minor metals like rare earths, tin, tungsten, and cobalt with prominent supply constraints. Zhongtai Securities' "turning point" emphasizes short-term expectation gaps, while Guotai Junan Securities' "embracing the primary upward phase after adjustments" emphasizes medium-term screening. For investors, the key is not to judge whether commodities will rise overall, but whether price increases can be retained in corporate profit statements. For aluminum, watch spot premiums, export demand, and electrolytic aluminum profits; for copper, focus on mine resources, TC changes, grid, and AI demand; for gold, look at central bank purchases, ETF inflows, and the US interest rate path; for minor metals, monitor quotas, export restrictions, and consecutive deficits.

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