According to a research report, the metals sector demonstrated accelerated profit growth in the first half of 2025, maintaining robust performance trends. Among subsectors, rare earth and tungsten, nickel-cobalt-tin-antimony, and copper delivered exceptional performance. The metals sector also showed improving dividend distributions and rising fund holdings. The sector's sustained rally has driven valuations to their highest levels since 2022, though still below 2021 peaks, with aluminum, lithium, and nickel-cobalt-tin-antimony subsectors showing pronounced undervaluation advantages.

Looking ahead, analysts expect gold prices to reach new highs following the commencement of interest rate cuts, while copper prices are positioned to benefit from strong fundamentals and continue their upward trajectory. Supply disruptions are catalyzing bottom opportunities in battery metals, while the strategic value of rare earth and tungsten remains prominent. The aluminum sector's earnings and valuations are expected to experience positive resonance. Additionally, material targets related to solid-state batteries and AI servers warrant attention.

**Market Review**: Comprehensive metals rally with rare earth and tungsten leading gains. Since the beginning of 2025, the metals index has surged 52.5%, outperforming the CSI 300 index by 34.8 percentage points. In the second quarter through August 29, the metals index gained 35.8%, outpacing the CSI 300 by 20.1 percentage points, ranking second among all industry sectors for 2025 performance.

By subsector, rare earth magnetic materials, tungsten, and nickel-cobalt-tin-antimony indices performed best, gaining 123%, 91%, and 67% respectively since early 2025. Copper and gold advanced 53% and 43% respectively, while aluminum and lithium lagged with gains of 31% and 22%.

**Performance and Valuation Analysis**: Metals industry profit growth accelerating with aluminum, lithium, and nickel-cobalt-tin-antimony sectors showing lower valuations. In H1 2025, the non-ferrous metals industry achieved overall revenue growth of 6.7% year-over-year, with net profit attributable to shareholders climbing 37.5% year-over-year. In Q2 2025, sector revenue and net profit grew 5.6% and 18.9% year-over-year respectively, with quarter-over-quarter increases of 16.3% and 14.5%, marking substantial acceleration compared to 2024.

By subsector, rare earth and magnetic materials, gold, and copper demonstrated outstanding performance, with H1 2025 net profits growing 624.1%, 58.8%, and 40.2% year-over-year respectively. Aluminum showed modest growth of 1.5%, while lithium declined 87.6% year-over-year. In Q2 sequential terms, gold, nickel-cobalt-tin-antimony, and tungsten showed exceptional quarter-over-quarter growth of 49.1%, 45.2%, and 43.8% respectively, while lead-zinc and aluminum were relatively weaker at -15.7% and 6.1%.

As of August 29, 2025, the non-ferrous metals sector traded at 21.2x trailing twelve-month P/E and 2.8x P/B ratios, reaching their highest levels since 2022 while remaining below 2021 peaks. Among subsectors, aluminum, copper, and nickel-cobalt-tin-antimony show relatively low P/E valuations, with 2025 forecast P/E ratios of only 11x, 15x, and 18x respectively. Lithium and aluminum sectors exhibit low P/B valuations at just 1.8x and 1.9x respectively.

**Holdings and Dividend Analysis**: Funds continue increasing industrial metals positions with significant improvement in sector dividend distributions. As of Q2 2025, fund holdings in non-ferrous metals reached 127 billion yuan in market value, ranking ninth among 30 market sectors. Holdings represented 1.8% of total fund equity investments, essentially flat from year-end 2024 but remaining at elevated levels.

By subsector, industrial metals, precious metals, and rare metals accounted for 2.3%, 0.8%, and 0.9% of holdings respectively, with industrial and precious metals continuing to show overweight trends. Among individual stocks, copper and gold-related names saw notable position increases, while aluminum experienced concentrated position reductions.

In H1 2025, the metals industry achieved an overall dividend payout ratio of 15.0%, up 5.6 percentage points year-over-year, narrowing the gap with the broader A-share market from 9.5 percentage points to 5.4 percentage points. Industrial metals, precious metals, and rare metals subsectors achieved dividend ratios of 16.9%, 8.4%, and 9.8% respectively.

**Metals Sector Outlook**: Broad-based strength expected to continue. Looking forward, analysts anticipate gold prices reaching new highs following rate cut commencement, potentially challenging $4,000 per ounce. Copper prices are positioned to benefit from robust fundamentals and target $10,500 per ton, with clear sector valuation expansion trends.

Supply disruption catalysts combined with sector rotation trends create compelling bottom opportunities in battery metals. Additionally, the strategic value of rare earth and tungsten remains prominent, while aluminum sector earnings and valuations are expected to experience positive resonance.

For metal materials, solid-state batteries and AI server themes are expected to maintain high growth momentum, with related materials such as solid electrolytes and copper foil potentially benefiting.

**Risk Factors**: Sharp decline in metal prices; domestic economic recovery falling short of expectations; overseas economic recession; Federal Reserve rate cuts below expectations; upstream supply growth exceeding expectations; overseas asset operational risks; new capacity construction progress below expectations; unexpected industry policy changes; environmental and safety supervision severity exceeding expectations.