GTHT has released a research report indicating a decline in market risk appetite has led to adjustments in precious metal prices. Expectations for strategic stockpiling of copper provide underlying support, while aluminum faces price pressure due to seasonal demand weakness. Energy metals experience robust demand, but their prices are being suppressed by the downturn in risk sentiment. The firm maintains a positive outlook on rare earths as critical strategic resources. Under tight supply-demand conditions, while supply-demand balance sheets are important, greater attention should be paid to the core impact of macro factors on metal price trends. Monetary policy, macroeconomic expectations, geopolitical dynamics, and supply disruptions will be key determinants.
Key views from GTHT are as follows:
Precious Metals: Risk aversion leads to price adjustments. A pullback in US tech stocks due to earnings missing expectations, combined with statements from the US Treasury Secretary supporting a strong dollar and market expectations for the new Fed Chair's balance sheet reduction policy, contributed to declining risk appetite. This, alongside previously crowded positioning in precious metals, led to price adjustments last week (week of February 6th). Continued gold purchases by the People's Bank of China in January and rising holdings in gold ETFs are expected to remain important factors supporting gold prices. London silver lease rates remained stable, while US silver inventory levels declined rapidly.
Copper: Overseas macro pressures persist, strategic stockpiling expectations provide support. The nomination of a hawkish candidate for the next Fed Chair strengthened market expectations for balance sheet reduction and a strong dollar, putting pressure on copper prices. However, research by a domestic nonferrous metals industry association into establishing a "strategic copper concentrate reserve," shifting the stockpiling focus from refined copper upstream to ores, aims to enhance control over strategic resources and hedge against overseas supply disruptions. Coupled with the rigid demand driven by AI computing infrastructure upgrades to power grids, copper prices have shown strong resilience against declines despite macro correction pressures. The price center is expected to steadily rise, supported by strategic premiums.
Aluminum: Mixed macro signals and weak seasonal demand pressure prices. Macro-economically, the US ISM Services PMI returned to expansion territory in January, but weaker-than-expected ADP employment figures led to volatile aluminum price adjustments. Fundamentally, demand continued to weaken due to the Spring Festival holiday, increased downstream facility closures, and high aluminum prices. The comprehensive operating rate for aluminum processing fell by 1.5 percentage points month-on-month to 57.9%. Inventory accumulation trends continued unabated during the off-season.
Tin: Overseas sentiment and fund selling trigger downstream restocking resilience. Tin prices continued their downward trend, pressured by overseas macro factors and fund selling. Recent increased activity in tin ingot trading on the Indonesian exchange, combined with resumed production in Myanmar, suggests potential marginal easing on the supply side. Concurrently, as tin prices fell, downstream purchasing willingness increased, providing some support and indicating a slight improvement in supply-demand margins.
Energy Metals: Strong demand meets price pressure from risk aversion. Lithium Carbonate: Inventories declined for the fourth consecutive week last week, indicating sustained strong demand despite rising production. Expectations of a reduction in export tax rebates for battery products may lead to front-loaded battery demand. Uncertainty remains regarding the timely resumption of production at a key Jiangxi mine, causing market divergence. Cobalt Sector: Upstream prices remain high due to tight raw material supply, while downstream purchasing is cautious. Cobalt companies are increasingly extending into downstream new energy sectors, building integrated cost advantages from cobalt-nickel-precursor-cathode materials to enhance competitive barriers.
Rare Earths: Praseodymium-Neodymium oxide prices continue to rise. The supply-demand dynamic for light rare earths remains tight, with prices continuing to recover supported by pre-holiday restocking demand. Heavy rare earth prices generally maintained a slight fluctuating trend. The firm remains optimistic about the investment value of rare earths as key strategic resources.
Strategic Metals Value Highlighted. Tungsten: Long-term contract price hikes ignite the market, driven by a "volume-shrinking price increase" dynamic. The tungsten market maintained strong momentum during the week, with leading companies significantly raising their February long-term contract prices, systematically lifting price levels across the entire industry chain. Although downstream carbide industries showed reduced rigid demand due to cost transmission pressures amid the approaching Spring Festival and high-price caution, seller market characteristics are prominent against a backdrop of tight mining quotas and policy controls. The tight spot supply situation is difficult to resolve short-term, suggesting tungsten prices may remain firm at high levels. Post-holiday, attention should focus on downstream restocking intensity and the adjusting role of the scrap tungsten market. Uranium: January long-term contract prices for natural uranium hit a decade-high. Persistent supply rigidity and nuclear power development create a lasting supply-demand gap, suggesting uranium prices have potential for further increases.
Risk warnings include downstream demand weaker than expected, substantial supply-side releases, and Fed interest rate cuts falling short of expectations.