Orient Securities·2026-01-11 12:29Investment Rating - The report maintains a "Positive" investment rating for the non-ferrous and steel industry in China [5] Core Insights - The report emphasizes that investing in resource stocks is not only about bullish metal prices but also serves as a hedge against rising inflation. The recent surge in metal prices, including gold, silver, copper, and aluminum, is attributed to a significant drop in market expectations for a Federal Reserve rate cut, alongside rising inflation expectations [8][13] - The aluminum sector is expected to benefit from geopolitical events, with China's electrolytic aluminum industry poised to enjoy valuation premiums due to its supply chain security and competitive advantages. The report highlights the increasing domestic supply of bauxite and alumina, which enhances the industry's resource security [14] - The precious metals sector is viewed positively as the long-term debt cycle enters its late stage, with rising physical prices reflecting a loss of trust in fiat currency systems. The report anticipates that precious metal prices will continue to reach historical highs in 2026 [15] - The copper sector faces supply chain vulnerabilities, with recent labor disputes leading to production cuts. The report suggests that the basic fundamentals support the equity side of copper investments, which are expected to rise alongside copper prices [16] Summary by Sections Non-Ferrous Metals - The report indicates that the recent collective rise in metal prices is a response to inflationary pressures and a re-evaluation of physical asset values as the dollar debt cycle matures [8][13] - The aluminum sector is highlighted for its strong supply chain capabilities, with domestic production of bauxite and alumina expected to increase, providing a competitive edge [14] - The precious metals market is projected to see continued price increases, driven by a shift in investor sentiment towards physical assets as a safeguard against debt risks [15] Steel Industry - The steel industry is currently experiencing a weak fundamental outlook as it approaches the year-end off-season, with a slight increase in iron and steel production but a decrease in demand [17][22] - Inventory levels for both social and steel mill stocks have increased, indicating a potential oversupply situation [24] - Steel prices have shown a slight overall increase, with specific products like hot-rolled steel experiencing marginal price rises [36][37] New Energy Metals - The report notes a significant year-on-year increase in lithium carbonate production, with December 2025 figures showing a 69.09% rise [40] - The demand for new energy vehicles remains strong, with production and sales figures for November 2025 reflecting substantial growth [44] - Prices for lithium and cobalt have risen sharply, indicating a robust market for new energy metals [49][50]