CITIC SEC released a research report stating that liquidity easing and supply-side constraints in 2026 are expected to remain key investment themes in the energy and materials sector, benefiting precious metals, industrial metals, and select chemicals such as chromium and refrigerants. Against this backdrop, ongoing U.S.-China tensions continue to elevate the strategic value of metals like rare earths and tungsten. Meanwhile, domestic anti-overcapacity policies may drive a rebound in coal, steel, and silicon prices, presenting bottom-fishing opportunities. High-demand sectors like lithium and potash are also poised for upward trends.

**Market Recap: Metals Outperform, Energy Chemicals Lag** Year-to-date in 2025, the non-ferrous metals index has significantly outperformed the broader market, led by strong performances in precious and rare metals. Basic chemicals and steel indices have matched market returns, while coal and petrochemicals have underperformed. Commodity-wise, metal prices with stronger resource attributes have fared better than energy-chemical products.

**Precious Metals & Copper: Top Picks Amid Easing Liquidity** Despite a recent pullback, gold prices are expected to rise further in 2026, supported by Fed rate cuts, sustained ETF inflows, and structural drivers like dollar debt risks and de-dollarization trends. CITIC forecasts gold at $4,000–$5,000/oz. Silver, with high price elasticity, may trade at $50–60/oz. Copper remains a top conviction pick, benefiting from both liquidity tailwinds and tightening supply, with a projected range of $10,000–$12,000/ton and strong valuation upside.

**Supply Constraints to Boost Aluminum, Cobalt, Chromium, and Refrigerants** Supply-side pressures will persist, with aluminum output growth slowing and disruptions amplifying marginal effects. Cobalt faces severe shortages due to export quotas in the Democratic Republic of Congo. CITIC expects aluminum at RMB 21,500/ton and cobalt at RMB 400,000–450,000/ton. Chromium and refrigerants, constrained by environmental policies and quotas, offer pricing power to industry leaders.

**Strategic Metals Gain on U.S.-China Rivalry** Rare earths and tungsten are seeing rising demand from defense and advanced manufacturing, compounded by export controls spurring overseas inventory builds. Praseodymium-neodymium oxide prices may reach RMB 550,000–650,000/ton, with tungsten at RMB 300,000–350,000/ton.

**Lithium & Potash: High Growth Potential** Lithium prices bottomed in Q4 2025 on stronger-than-expected energy storage demand, with further upside to RMB 80,000–100,000/ton in 2026. Potash prices are buoyed by delayed expansions in key regions and robust Southeast Asian demand, alongside rising costs.

**Coal, Steel, Silicon, and Oil: Policy-Driven Recovery** Anti-overcapacity measures have lifted coal, steel, and silicon prices since H2 2025. CITIC expects thermal/coking coal and silicon prices to edge higher in 2026, while steel’s supply discipline and iron ore RMB pricing reforms bolster sentiment. Brent crude may rise to $65–70/barrel as markets rebalance.

**Risks**: Commodity price declines; weaker-than-expected demand; slower Fed rate cuts; supply surges; overseas operational risks; capacity delays; stricter safety/environmental policies; escalating trade disputes.