Recent trends in the global precious and base metals markets have diverged. Gold prices have remained firm, supported by significant purchases from the Chinese central bank. Meanwhile, copper, aluminum, and tin have primarily traded within a range, influenced by weaker downstream demand. Lithium prices, however, have risen, driven by a decline in inventories. The latest research report from Huaxin Securities indicates that the current supply-demand dynamics in the metal markets are clear. The firm maintains its "Recommended" investment rating for the gold, copper, aluminum, tin, and lithium sectors and has identified key companies within these specific segments.
In the precious metals sector, the London gold spot price was reported at $4,741.40 per ounce this week, an increase of $104.50 per ounce, or 2.25%, since May 1st. The London silver spot price was $80.64 per ounce, up $7.50 per ounce week-on-week, representing a significant gain of 10.25%.
Regarding macroeconomic data, the final reading for U.S. durable goods orders in March showed a month-on-month increase of 0.8%, aligning with the previous figure and market expectations. The U.S. unemployment rate for April was 4.3%, also unchanged from the previous reading and expectations. In the labor market, U.S. non-farm payrolls increased by 115,000 in April, surpassing both the previous figure of 178,000 and the expected 65,000. A breakdown shows the private sector added a net 123,000 jobs. Within this, goods-producing sectors contributed a net increase of 10,000 jobs, while service-producing sectors added 113,000 jobs. Government sector employment decreased by 8,000. Service-producing sectors were the primary driver of job growth, while government employment declined.
According to the CME FedWatch Tool, market expectations suggest the U.S. Federal Reserve may keep interest rates unchanged through 2026, with the next potential rate cut anticipated in September 2027. Although the start of a rate-cutting cycle appears distant, recent substantial gold purchases by the Chinese central bank have provided strong support for gold prices.
The copper and aluminum markets are currently characterized by weak short-term demand, leading to range-bound price movements. For copper, the LME copper price settled at $13,497 per ton this week, up $532 per ton, or 4.10%, week-on-week. SHFE copper settled at 104,460 yuan per ton, an increase of 3,490 yuan per ton, or 3.46%. Inventory data shows LME and COMEX copper stocks rose week-on-week, while SHFE copper inventories declined. Social inventories of refined copper in China increased week-on-week. On the smelting side, the spot TC price for Chinese copper concentrate was -$93.90 per dry ton this week, down $15.83 week-on-week. Downstream operating rates generally weakened, with operating rates for refined copper rod, recycled copper rod, and wire and cable production all declining sequentially. Following pre-holiday stockpiling, the pace of downstream resumption has been slow, with high copper prices dampening procurement interest. The market is primarily focused on restocking for essential needs.
For aluminum, the domestic price for primary aluminum was 24,240 yuan per ton, showing a slight week-on-week decrease. Inventory trends diverged internationally, with LME aluminum stocks falling week-on-week, while SHFE and domestic social inventories increased. In terms of smelting profits, instant profits for primary aluminum smelting in Yunnan province increased week-on-week, while they saw a slight decline in Xinjiang. Downstream sectors are gradually entering a seasonal consumption lull. Operating rates at leading aluminum profile and aluminum wire/cable enterprises saw minor declines. The industry is exhibiting a pattern of strong supply and weak demand, suggesting aluminum prices will likely remain weak and stable with fluctuations in the short term.
Tin prices, after a significant rally, are now facing demand suppression due to high prices. The domestic price for refined tin was reported at 424,600 yuan per ton, up 38,260 yuan per ton, or 9.90%, week-on-week. Inventory data shows SHFE tin stocks increased week-on-week, while LME tin stocks saw a slight decrease. On the supply side, primary mine supply continues to tighten due to slower-than-expected resumption at mines in Myanmar's Wa State and seasonal disruptions to Indonesian export quotas. However, with tin prices exceeding 400,000 yuan per ton, small and medium-sized downstream solder enterprises are facing significant cost-price inversions, leading to sharply compressed profits. Procurement interest is low, market activity is subdued, and restocking is limited to essential needs. Post-holiday resumption has been slow, and tin prices are expected to trade within a range.
The lithium market has experienced a price increase alongside a decline in inventories. According to data from BaiChuan YingFu, the domestic price for industrial-grade lithium carbonate was 190,000 yuan per ton this week, up 17,000 yuan per ton, or 9.83%, week-on-week. Total industry-wide lithium carbonate inventories in China stood at 20,360 tons, a decrease of 195 tons week-on-week. On the supply side, weekly production saw a slight decline due to maintenance at some spodumene-based production lines. Following the sharp price increase, downstream material plants have shown weak interest in spot purchases, preferring to consume existing inventories and fulfill long-term contracts. The high prices are currently exerting some inhibitory effect on procurement willingness in the short term.
Regarding sector ratings and investment strategy, Huaxin Securities states that the Federal Reserve remains within a potential rate-cutting cycle, warranting a maintained "Recommended" rating for the gold industry. Persistently tight copper ore supply supports a "Recommended" rating for the copper sector. The rigid supply of domestic primary aluminum capacity justifies a "Recommended" rating for aluminum. Tight supply in the tin ore segment is expected to support prices, leading to a "Recommended" rating for tin. With lithium prices entering an upward cycle and inventories falling, a "Recommended" rating is maintained for the related industry.
For key stock recommendations: In the gold sector, the firm favors Zhongjin Gold, Shandong Gold, Chifeng Gold, Shanjin International, and China Gold International. For the copper sector, attention is on Zijin Mining Group, China Molybdenum, JCHX Mining, Western Mining, Zangge Mining, and MMG Limited. The aluminum sector recommendations include Shenhuo Group, Yunnan Aluminum, Tianshan Aluminum Group, and China Hongqiao Group. For the tin sector, the firm is positive on Yunnan Tin Company and Xingye Silver Tin. The lithium sector highlights Sinomine Resource Group, Shenzhen Chengxin Lithium Group, Guocheng Mining, Ganfeng Lithium Group, and Huaxi Nonferrous Metals.
The institution also cautions about risks, including a significant rise in U.S. inflation, the Federal Reserve's rate cuts falling short of expectations, weaker-than-expected recovery in domestic demand for copper, aluminum, tin, and lithium, faster-than-expected progress in related mine production, and unexpected shutdowns of primary aluminum capacity.