CMOC(SH:603993)2025-12-08 15:36Summary of Key Points from the Conference Call Industry Overview - Base Metals: The base metals sector is entering 2026 with firmer fundamentals, indicating a positive outlook for prices and demand [1] - Cobalt: The Democratic Republic of Congo's (DRC) cobalt export ban continues, supporting a price recovery that has doubled year-to-date. A proposed quota system may allow for regulated supply, but production is expected to remain stable due to its byproduct nature from copper mining [2] - Aluminium: China's production ceiling is expected to limit domestic supply growth to +0.5% year-on-year in 2026, while overseas supply additions are modest at +3% year-on-year. Demand growth is driven by electric vehicles (EVs) and grid investments, leading to a projected market deficit in 2026 and a widening deficit in 2027 [3] - Copper: China's top copper smelters have agreed to cut capacity by 10% in 2026 to address overcapacity and negative processing fees. Treatment and refining charges turned negative in 2025 due to tight supply [4] - Iron Ore: The Simandou iron ore mine in Guinea shipped its first consignment of 200,000 tons to China, which may reduce China's reliance on Australian and Brazilian imports and potentially weigh on prices [5] Investment Recommendations - Preferred Materials: Aluminium is favored due to low inventories and a production cap. Gold is also recommended amid the current macroeconomic backdrop. The long-term outlook for construction materials is positive, contingent on supply-side reforms and earnings improvements [6][9] Price Trends and Estimates - Commodity Prices: Base metal prices remain strong due to robust demand and tight supply. Recent price changes include: - Copper: Shanghai Copper Spot at USD 12,561, up 3% over 5 days, and LME Copper Spot at USD 11,214, up 4% [10] - Aluminium: Shanghai Aluminium Spot at USD 3,070, up 1% over 5 days, and LME Aluminium Spot at USD 2,835, up 2% [10] - Cobalt: Shanghai Cobalt Spot at CNY 58,689, up 3% over 5 days [10] - Gold: Gold Spot at USD 4,217, up 1% over 5 days [10] Future Price Estimates - Aluminium: Expected prices are USD 2,750/t in 2026 and USD 2,850/t in 2027 [3] - Copper: Projected prices are USD 4.50/lb in 2025 and USD 5.02/lb in 2026 [11] - Cobalt: Estimated to rise to USD 17.69/lb in 2026 [11] - Gold: Expected to reach USD 4,600/oz in 2027 [11] Analyst Coverage - Analysts from HSBC covering the metals and mining sector include Howard Lau, Jonathan Brandt, Shilan Modi, and others, providing insights into various commodities and market dynamics [7][8] Conclusion - The overall sentiment in the base metals sector is optimistic, with expected price increases and strategic shifts in supply dynamics. Investment in aluminium and gold is recommended, while monitoring the impacts of regulatory changes in cobalt and iron ore supply is crucial for future strategies [6][9]