Understanding the Market | The Nonferrous Sector Performs Strongly, with Federal Reserve Rate Cut Expectations and Tight Supply at the Mine Supporting High Volatility in Industrial Metal Prices
The non-ferrous sector performed strongly, with China Aluminum rising 5.57%, CMOC rising 3.58%, JCCL rising 3.18%, and Zijin Mining rising 3.03%. The Federal Reserve's interest rate cut expectations and tight supply at the mining end support high-level fluctuations in industrial metal prices. Global macro sentiment has improved, with tight copper concentrate supply and limited operations for smelting companies. Domestic policies are promoting capacity clearance, which may affect the demand structure for industrial metals. The passage of the U.S. tax reduction bill may stimulate the economy, but tariff policies and geopolitical risks still bring uncertainty
According to Zhitong Finance APP, the non-ferrous sector is performing strongly. As of the time of writing, China Aluminum (02600) is up 5.57%, trading at HKD 5.69; CMOC (03993) is up 3.58%, trading at HKD 8.11; JIANGXI COPPER (00358) is up 3.18%, trading at HKD 15.56; ZIJIN MINING (02899) is up 3.03%, trading at HKD 20.4.
In news, U.S. President Trump recently stated on social media that the U.S. will impose a 50% tariff on imported copper, effective August 1, 2025. Dongguan Securities pointed out that in the industrial metals sector, global macro sentiment is gradually improving, and the Federal Reserve has released some dovish signals, driving a rebound in industrial metal prices. Currently, the sector is in a traditional off-season, and attention is focused on domestic policies that may drive downstream demand for industrial metals.
Western Securities noted that the industrial metals industry is showing a tight supply-demand pattern, especially with ongoing tight supply of copper concentrate. The processing fee (TC/RC) for long-term copper concentrate contracts in 2026 is locked at $0 per dry ton, setting a historical low, reflecting a market pattern of "strong mines and weak smelting," where smelting companies can only rely on by-product revenues to maintain operations. The expectation of interest rate cuts by the Federal Reserve, combined with tight supply at the mine level, supports high-level fluctuations in industrial metal prices, with LME copper and aluminum inventories continuously depleting. Domestic policies promoting "anti-involution" capacity clearance, along with accelerated production cuts in industries such as steel and cement, may further impact the demand structure for industrial metals. Additionally, the passage of the U.S. tax reduction bill may stimulate the economy, but the repeated tariff policies and geopolitical risks still create uncertainty for metal supply and demand
