China’s Metals Markets Surge on Bullish Outlooks

Core Insights - Traders are making record investments in China's metals markets, anticipating a continued rise in base metals and lithium prices [1][2] - Factors such as tightening global metal supply, lower interest rates, and strong industrial demand are driving these investments [2][6] Group 1: Market Activity - Speculators held record-high open interest in base metals like copper, zinc, nickel, tin, lead, and aluminum on the Shanghai Futures Exchange at the end of 2025 and start of 2026 [1] - Trading values for the six base metals on the Shanghai Futures Exchange increased by over 260% year-on-year [2] - In December 2025, the turnover for trades in base metals, gold, and silver reached 37.1 trillion Chinese yuan, equivalent to $5.3 trillion [3] Group 2: Lithium Market - Open interest and trading volume in lithium on the Guangzhou Futures Exchange reached all-time highs in November 2025, despite a decline in December due to increased fees and position caps [4] - Speculators continue to show strong interest in lithium as a key battery and energy transition metal [4] Group 3: Future Outlook - Analysts predict that trading volumes and open interest in Chinese metals markets will remain high in 2026, with most base metals expected to be well-supported [5] - Uncertainty regarding U.S. tariffs and tighter markets due to supply disruptions are expected to further boost metals markets this year [6] - The global aluminum market is anticipated to be tight as China nears its production cap and other producers consider closures due to high energy costs [6]