The Zhitong Finance App learned that Huatai Securities released a research report saying that although China's manufacturing PMI in September has returned above the boom and bust line since April this year to 50.2, showing signs of recovery in the Chinese economy, interest rates on 10Y US bonds continued to rise sharply during the Chinese holiday period and reached 23 bps, and market concerns about whether the US economy can land softly. Based on the spillover impact of the US economy on the global economy, if the US economy performs weaker than expected, it will directly drag down the growth rate of global metal demand and thereby suppress the performance of metal prices, especially for varieties with relatively strong financial attributes. Affected by this, contract prices for major global commodities generally fell during the Chinese holiday period, with copper/aluminum/lead/nickel falling 2.6/0.3/0.8/2.7% respectively.Market expectations in the US macroeconomic economy will continue to be the core variable driving short-term fluctuations in commodity prices and the price center in 2024.
▍ The main views of Huatai Securities are as follows:
Aluminum is slightly stronger than copper, based on a stronger microsurface and weaker macroscopic effects
LME aluminum prices have outperformed LME copper prices by 5.2 pct and 8.6 pct in the past month and the past three months. This is mainly a result of the stronger micro fundamentals of the global aluminum industry and the fact that copper prices are more likely to be affected by macro-level expectations. After the centralized resumption of production of 1.8 million tons of electrolytic aluminum in Yunnan, China, there was no significant increase in domestic aluminum inventories and the possibility of global shutdown of aluminum production capacity to resume large-scale production in the short term is low. The proportion of global electrolytic aluminum production capacity operating capacity is at a historically high level, and the photovoltaic industry, which has seen the strongest increase in new energy this year, has a stronger driving effect on aluminum demand.
The copper industry was affected by the gradual release of copper concentrates from 3Q23 to the market from 3Q23 due to factors such as export bans and production disruptions last year, and the rise in copper inventories from historically low levels, and the financial characteristics of copper are more likely to be affected by the macro-level expectations of major global economies.
The accumulation rate of domestic products during the holiday season slightly exceeded the average of previous years, but total inventory was still low
According to SMM data, China's inventory of aluminum ingots and bars increased by 120,000 tons during the National Day holiday, which is higher than the average value of 77,200 tons for the same period in the past five years. China's electrolytic copper social inventory increased by 205,000 tons, slightly lower than the average value of 23,300 tons for the same period in the past five years. Social zinc inventories increased by 12,000 tons, lower than the average value of 152,000 tons for the same period in the past five years. Although there were differences in inventory during the National Day, the overall increase was consistent with previous years. The gradual recovery of the domestic economy and the strong development of the new energy sector offset some of the negative factors in economic growth, such as the decline in real estate and weakening exports.
From a global perspective, global inventories of copper and aluminum have been at a low level in the past 20 years, which shows the dynamic balance between supply and demand in the market, and also provides very strong support for commodity prices. Once demand concerns are lifted, low inventories will be an important driver of upward price elasticity.
Supply is fixed on the long end, demand is fixed on the short end, and we are optimistic about the mid-term price trend of copper and aluminum
The global theme for copper and aluminum for the next 2-3 years is “supply fixed on the long end, demand on the short end”. We are optimistic about the mid-term upward trend in copper and aluminum prices under restrictions on capacity expansion, a sharp slowdown in mine supply growth, and strong expansion of structural demand driven by the development of the new energy industry. China's electrolytic aluminum industry's capacity ceiling policy will have a global spillover impact. The global supply response rate is slowing down and response capacity is weakening, and the global capacity utilization rate is currently at a high level. The increase in copper concentrate production declined sharply in 2025, and newly developed copper mines around the world faced longer approval times and more restrictions.
In the medium to long term, the tightening supply side of copper and aluminum and the increase in structural demand are the core driving forces driving up prices. However, in the short term, the expectations and performance of the global macro market, especially the US economy, are the core variables that determine prices.
Global economic growth was significantly weaker than expected, and demand for photovoltaic wind power/new energy vehicles grew lower than expected.