Early Thursday (October 30) Beijing time, the Federal Reserve concluded its two-day monetary policy meeting and announced a 25-basis-point cut to the federal funds rate target range, bringing it to 3.75%-4.00%, in line with market expectations. This marks the Fed’s second rate cut in 2025 and follows another cut in September this year.
How does a Fed rate cut boost nonferrous metals prices? Industry experts explain in three key points: 1. A Fed rate cut is equivalent to monetary easing, leading to currency depreciation and prompting investors to seek inflation-hedging physical assets. 2. Most nonferrous metals are priced in U.S. dollars internationally. A weaker dollar makes dollar-denominated metals cheaper, increasing global demand. 3. Lower interest rates reduce borrowing costs for businesses, encouraging production expansion and driving up demand for industrial metals like copper and aluminum.
Domestically, the China Nonferrous Metals Industry Association reported on October 29 that China has established a comprehensive lithium supply chain. The country’s lithium battery industry benefits from a complete, large-scale supply chain—from development to recycling—with global dominance in lithium salt production, key materials, and battery manufacturing, forming a highly competitive industrial cluster.
Dongwu Securities highlights strong production and sales in the lithium sector, with industry leaders projecting better-than-expected performance by 2026. Battery manufacturers (both tier-1 and tier-2) are seeing improved profitability, while material suppliers, including lithium hexafluorophosphate and lithium iron phosphate, report unexpected price hikes and significant profit potential, reinforcing bullish sentiment for nonferrous metals leaders.
Looking ahead, analysts note that nonferrous metals, as globally priced commodities, are central to the ongoing commodities bull market. Tight supply conditions, rising strategic metal reserve demand amid deglobalization, and expectations of a domestic macroeconomic recovery suggest nonferrous metals could be a core driver of this slow bull cycle.
Market-wise, the Nonferrous Metals Leaders ETF (159876), tracking top industry players, surged 4.58% on October 29, with turnover hitting 64.88 million yuan, up 35% from the previous session. Among its 60 constituents, 52 stocks rose over 2%, with 25 gaining more than 5%. Aluminum leaders Nanshan Aluminum and Zhongfu Industrial both hit the daily limit, while heavyweight Chalco jumped over 7%, Northern Rare Earth rose 4%, and Zijin Mining climbed 3%.
As of October 29, the ETF’s AUM reached 537 million yuan, making it the largest fund tracking its benchmark index.
**The "Metal Heart" of Future Industries, the "Golden Blood" of Modern Manufacturing** Given divergent trends across metals, a diversified approach—such as investing in the CSI Nonferrous Metals Index (27.6% copper, 14.5% gold, 13.1% aluminum, 10.4% rare earths, 8.4% lithium)—can help capture sector-wide beta. The Nonferrous Metals Leaders ETF (159876) and its linked funds (Class A: 017140; Class C: 017141) offer broad exposure, mitigating single-metal risks for portfolio allocation.
**Risk Disclosure**: The ETF tracks the CSI Nonferrous Metals Index (base date: Dec 31, 2013; launch date: Jul 13, 2015). Past annual returns: +35.84% (2020), +35.89% (2021), -19.22% (2022), -10.43% (2023), +2.96% (2024). Index composition may change per rules; historical performance is not indicative of future results. Constituent data is for reference only and does not constitute investment advice or reflect fund holdings. The fund is rated R3 (moderate risk) and suitable for balanced (C3) or higher-risk investors. Investment decisions carry risks; past performance does not guarantee future returns.