Summary of Metals Quarterly Q4 2025 Equities Industry Overview - The report focuses on the metals industry, highlighting various macroeconomic and commodity-specific factors impacting metal markets, including tariffs, geopolitical tensions, supply chain alterations, and the Federal Reserve's monetary policy [1][13][14]. Key Points Demand and Supply Dynamics - Demand for metals has remained resilient, driven by front-loading shipments to the US and increasing demand from sectors such as renewable energy, electric vehicles (EVs), and AI data centers [2][14]. - However, uncertainties persist due to expected slowdowns in global trade, domestic consumption weaknesses, and policy changes affecting EV sales [2][14]. Price Trends - Major commodity prices, except coal, have increased year-to-date (y-t-d), with precious metals prices rising over 50% y-t-d [3][29]. - Specific price forecasts for various metals include: - **Copper**: Expected to rise from USD 4.15/lb in 2024 to USD 4.50/lb in 2025, reflecting a 6% increase [3]. - **Cobalt**: Anticipated to increase significantly due to supply disruptions, with prices forecasted to rise from USD 11.90/lb in 2024 to USD 14.60/lb in 2025 [3]. - **Gold**: Forecasted to reach USD 3,355/oz in 2025, a 4% increase from previous estimates [3]. Supply Issues - Supply disruptions have been a significant factor in driving prices higher for many metals, particularly copper and cobalt, due to accidents and export bans [4][28]. - The Grasberg mine accident is expected to result in a production loss of approximately 220,000 tons in 2025 and 270,000 tons in 2026 [28]. Preferred Metals - Analysts have identified platinum, copper, and rhodium as preferred metals due to their favorable supply-demand dynamics, while nickel has been downgraded to least preferred due to a lack of catalysts [5][11][30]. Geopolitical and Economic Factors - Geopolitical uncertainties and macroeconomic factors continue to influence metal prices, particularly gold, which is being supported by elevated trade risks [4][11]. - The ongoing "anti-involution" campaign in China aims to address over-competition and outdated capacity, which may have long-term implications for metal supply and demand [25][26]. Future Outlook - The outlook for metals remains clouded, with expectations of continued volatility in prices due to various factors, including potential tariff increases and changes in global trade dynamics [17][18]. - The transition to renewable energy and increased EV penetration are expected to be key demand drivers for certain metals, despite challenges in traditional sectors [22][23]. Additional Insights - The report emphasizes the importance of being selective in commodity investments, as not all commodities will perform similarly in the coming years [32][33]. - Analysts expect a structural deficit in the copper market by 2027-2028, driven by supply issues and increased demand from the EV sector [74][75]. This summary encapsulates the critical insights and forecasts from the Metals Quarterly Q4 2025 report, providing a comprehensive overview of the current state and future outlook of the metals industry.

Market Dynamics - Trafigura has acquired a metals warehousing firm [1] - The warehousing firm has sizable operations in Singapore [1] - A mountain of surplus inventory in the Asian logistics hub opens up lucrative trading opportunities [1]

Group 1 - Oil prices have dropped to a five-month low due to changing market expectations regarding supply, particularly influenced by potential discussions between Trump and Putin about a ceasefire in the Russia-Ukraine conflict [3][4] - The price of copper has increased due to supply issues from global mines and expectations of a potential interest rate cut by the Federal Reserve, with LME copper prices stabilizing above $10,000 per ton [3][4] - Gold prices have surged to over $4,330, rising nearly 8% in a week, driven by expectations of monetary easing from the Federal Reserve, economic uncertainty in the U.S., and increased gold purchases by central banks, resulting in a year-to-date increase of over 60% [3][4] Group 2 - The divergence in commodity prices is primarily driven by differing expectations: oil prices are betting on increased supply, gold prices on monetary easing, and copper prices on stable demand [4][5] - It is essential for investors to focus on the underlying logic of supply and demand dynamics, rather than reacting to daily price fluctuations [4][5]

Economic Data Overview - The latest NAHB housing market index shows a slight improvement, coming in at 37, above the expected 33, but still indicates a contractionary sentiment in the housing market [2][3] - The Philly Fed manufacturing index has turned negative, dropping 36 points to -12.8%, the lowest since April, with significant declines in shipments [6][7] Housing Market Insights - The housing market remains in a dismal state, with any index below 50 indicating pessimism; however, there are signs that future interest rate reductions could stimulate buyer activity [3][4] - Inventory levels are increasing, which may lead to lower prices in the housing market [4] Manufacturing Sector Analysis - New orders in the manufacturing sector increased by six points, while the employment index slightly decreased to 4.6% [8] - The manufacturing landscape shows variability across different regions, with the Empire State manufacturing index performing better than the Philly Fed index [8] Commodity Market Trends - Gold prices are reaching new all-time highs, driven by FOMO trading and market volatility, with significant inflows into gold ETFs [11][13] - The energy sector is experiencing downward pressure on prices due to economic growth concerns, with natural gas prices also declining [15] Oil Market Dynamics - The oil market is skeptical about claims from India regarding reducing Russian oil imports, as alternative supply sources are not clearly defined [17][18] - A potential meeting between President Trump and Ukraine's president could lead to an LG deal, which may positively impact oil prices due to the correlation between LG demand and oil prices [19][20]

Supply Dynamics - Copper traders at LME Week observed a supply deficit, contrasting with previous expectations [1] Market Sentiment - The copper market's current state is the opposite of what was anticipated a year ago [1]

Market Expansion - Saudi Aramco's trading arm plans to hire copper traders [1] - This move signifies a push into metals markets [1] - Saudi Aramco is joining a growing wave of energy giants entering the metals sector [1]

Core Viewpoint - The domestic markets have remained stable despite challenges such as US tariffs and significant foreign institutional investor selling, supported by favorable monsoon conditions and expected recovery in domestic demand [1][2]. Market Analysis - The Nifty is valued at a 15-year average P/E multiple of 19.2x, with a 12-month target of 28,781, reflecting an increase from the previous target of 27,609. In a bull case scenario, the target rises to 30,220, while in a bear case, it drops to 25,903 [3]. Sector Performance - Domestic-oriented sectors are expected to outperform, with banks, NBFCs, auto, retail, consumer staples, defense, metals, and select durables identified as key outperformers [4]. Earnings Forecast - Strong growth is anticipated for Q2FY26, with a projected 9.7% rise in sales, 11.2% growth in EBIDTA, and a 9.9% increase in Profit Before Tax (PBT) [5]. Growth Drivers - The growth trajectory is expected to be driven by commodities such as metals, cement, and oil and gas, along with sectors like telecom, AMC, and EMS. Conversely, banks, Housing Finance Companies, media, and travel sectors are projected to see a decline in PBT [6]. Stock Recommendations - Preferred large-cap stocks include Adani Ports, Apollo Hospitals, Britannia, HAL, ICICI Bank, and ITC. Mid/small-cap picks include Amber Enterprises, DOMS Industries, Eris Lifesciences, and Voltamp Transformers. Recent additions to conviction picks are Mahindra & Mahindra, Tata Steel, State Bank of India, Amber Enterprises India, and Latent View Analytics, while Bharti Airtel, Aster DM Healthcare, Crompton Greaves Consumer Electricals, and Ingersoll Rand (India) have been removed [7].

Summary of LME Outlook: Navigating Copper's Price Ceiling, Aluminium and Nickel in Surplus, Zinc's Structural Shift Industry Overview - The report focuses on the industrial metals sector, specifically copper, aluminium, nickel, zinc, lithium, and cobalt, providing insights into market dynamics and price forecasts for 2026 and beyond [1][6][11]. Key Points Copper - **Price Forecast**: Expected to remain in the range of $10,000-$11,000 per ton for 2026/2027, with limited near-term upside due to market surplus [1][11]. - **Market Dynamics**: - Anticipation of a potential buyer strike from China if prices exceed $11,000, similar to the Q2 2024 scenario [11][12]. - Significant US copper inventories (760kt) could be released to rebalance the market if LME spreads tighten [12][14]. - Datacentre demand for copper is overestimated, accounting for only 1% of global demand, leading to a revised copper intensity assumption from 24t/MW to 17t/MW [12][14]. Aluminium - **Price Outlook**: Forecasted to decline to $2,350 per ton by Q4 2026 due to increased supply from Indonesia, which is expected to ramp up production significantly [1][21][22]. - **Market Conditions**: Current high smelter margins are not sustainable as the market is projected to enter a surplus of 1.5-2.0 million tons by 2026/2027 [21][23]. Nickel - **Market Status**: Persistent surplus expected, with prices forecasted to decline to $14,500 per ton by December 2026 [1][25][31]. - **Demand Factors**: Weaker demand from electric vehicle (EV) batteries and continued supply growth from Indonesia are contributing to the surplus [25][30]. Zinc - **Export Dynamics**: Anticipation of China becoming a net exporter of refined zinc by 2026 due to a structural shift in the global market [1][36][37]. - **Production Growth**: Chinese refined zinc production is expected to increase significantly, outpacing domestic demand, leading to a surplus [37][40]. Lithium - **Price Expectations**: Lithium prices are projected to average $8,900 per ton through 2026, driven by oversupply despite rising demand [1][45][46]. - **Market Conditions**: A significant increase in supply is anticipated, with producers planning around 1.3 million tons of new supply by 2028, which is nearly double the required amount to maintain stable inventories [45][46]. Cobalt - **Supply Constraints**: The introduction of export quotas in the DR Congo is expected to push the cobalt market into a deficit in 2026, tightening global supply [1][52][53]. - **Market Impact**: The DR Congo's dominance in global cobalt production (70%) means that any policy changes could significantly affect prices and supply dynamics [52][58]. Additional Insights - **Market Sentiment**: Current high prices for copper, aluminium, and zinc reflect bullish investor sentiment, influenced by expectations of US Fed rate cuts and a weaker dollar [1][6]. - **Long-term Trends**: The report emphasizes the importance of investment in grid and power infrastructure, which is expected to account for over 60% of copper demand growth from 2025-2030 [14]. This comprehensive analysis provides a detailed outlook on the industrial metals market, highlighting key trends, price forecasts, and potential risks for investors.

Core Viewpoint - The Indian stock market indices, Nifty 50 and Sensex, have shown positive momentum, driven by banking and pharmaceutical stocks, amid improving global sentiment and renewed foreign investor interest [1][6]. Market Performance - The Sensex closed at 82,500.82, up by 328.72 points or 0.40%, while the Nifty 50 ended at 25,285.35, gaining 103.55 points or 0.41% [2]. - Both indices recorded weekly gains of approximately 1.5%, with Nifty advancing 1.57% and Sensex climbing 1,290 points, marking their second consecutive week of gains [2]. Sectoral Performance - Nifty Realty and PSU Bank indices were the top gainers, each surging around 1.70%, while Nifty Pharma advanced 1.3% and Nifty Bank increased by 0.74% [3]. - Nifty Metal declined by 0.9%, and Nifty IT slipped by 1.10%, ending as the only major laggards [3]. Individual Stock Movements - Cipla led the Nifty 50 gainers, surging 3.63% to ₹1,568, followed by State Bank of India, which jumped 2.22% to ₹881.25 [4]. - Tata Steel was the top loser, falling 1.46% to ₹173.85, followed by TCS, which declined 1.10% to ₹3,028 [4]. Broader Market Trends - The Nifty Midcap 100 advanced 0.46% to 58,697.40, while the Nifty Next 50 rose 0.24% to 68,687.25 [5]. - Market breadth improved significantly, with 2,424 stocks advancing against 1,766 declines on the BSE [5]. Investor Sentiment and Future Outlook - Positive investor sentiment was bolstered by optimism over a potential India–US trade deal and easing geopolitical tensions in the Middle East [6]. - Foreign portfolio investors recorded net purchases of ₹2,830 crore over the past three sessions, indicating strong institutional flows [6]. - Analysts expect the positive momentum to continue, supported by ongoing earnings season and improving macroeconomic indicators, with the Nifty potentially moving towards 25,500–25,550 [7].

Economic Overview - Russia's nominal GDP stands at $2.2 trillion, similar to its level in 2013, prior to the annexation of Crimea [1] - The economy contracted by 1.4% in 2022 but is projected to grow by 4.1% in 2023 and 4.3% in 2024, with a forecasted slowdown to 1.0% growth this year [8] Sector Performance - Non-military sectors of the economy have contracted by 5.4% since the beginning of the year, indicating significant economic strain [2] - The construction industry is facing a downturn, with cement consumption expected to fall below 60 million tonnes, a level not seen since the COVID pandemic [5] Labor Market Adjustments - Major companies, including Cemros, Russian Railways, and GAZ, have implemented a four-day workweek to manage labor costs and avoid layoffs [6][12] - The unemployment rate has dropped to a record low of 2.1%, despite the economic challenges [8] Government Intervention - The Russian government has been compelled to provide support across various sectors, including coal and metals, to prevent mass layoffs and economic discontent [17][16] - In previous downturns, state support was extended to major employers, indicating a pattern of intervention during economic crises [16] Industry-Specific Challenges - The coal sector is particularly affected, with reports of 19,000 layoffs in the first half of 2025 and financial health deteriorating for many enterprises [18][19] - The steel industry is also under pressure, with discussions of a moratorium on bankruptcies and a quiet cutback in operations due to high interest rates and weak demand [21][22]