CITIC Construction Investment: 2025 Non-ferrous Allocation Proposals Focus on 4 Types of Investment Opportunities

The Zhitong Finance App learned that CITIC Construction Investment announced the 2025 investment strategy for the non-ferrous metals industry. Looking ahead to 2025, the non-ferrous configuration proposal focuses on 4 types of investment opportunities: (1) new artificial intelligence materials will usher in a long-term demand cycle; (2) “new productivity elements” represented by small metals will usher in a demand cycle; (3) precious metals will maintain an upward pattern; and (4) basic metals, especially aluminum, will usher in a profitable year.

CITIC Construction Investment's main views are as follows:

Three major logics for non-colored products to be realized in 2024:

(1) Commodities have ushered in a new cycle; the US interest rate cut cycle has begun, the US dollar currency has been overissued, credit restructuring, global geopolitical tension, currency diversification and de-dollarization have accelerated, and non-ferrous commodities have a medium- to long-term upward foundation. (2) The fourth industrial revolution led to an increase in demand; the fourth industrial revolution led to a sharp increase in demand for related metals, especially strategic small metals, and new quality productivity such as new energy, new materials, and artificial intelligence, starting a new cycle of demand for some products. Furthermore, with the end of the interest-rate hike cycle between the US and Europe, China's fiscal and monetary resonance, and improvements in the global economy boosted non-ferrous demand. (3) Resource scarcity is becoming more and more obvious; with dual-carbon-related policy restrictions, supply-side reforms showing effects, the spread of resource protectionism, and insufficient capital expenditure leading to rigid supply constraints, supply has maintained a low growth rate.

Demand opportunities for new quality productivity in 2025 may be more prominent:

Looking ahead to 2025, when Trump comes to power, global trade is once again facing uncertainty, but its impact may be limited. Combined with the US plan to guide the return of manufacturing and infrastructure development, China will further stabilize confidence, ease finances, stabilize housing prices, and encourage consumption. Demand for non-ferrous materials will remain resilient. The three main logic of looking at colored products has not changed much, but it will be affected by fluctuations in the US dollar. The supply and demand levels are still tight, and the direction most determined on the demand side is the direction of “new quality productivity elements.”

Risk warning:

1. The global economy has declined sharply, and consumption has shrunk in a cliff-style manner. According to the World Bank's newly released “Global Economic Outlook”, the global GDP growth rate is 2.6% in 2024 and 3.2% in 2025. The agency believes that as inflation slows and growth stabilizes, the global economy is on the path to a soft landing, but risks remain. European and American economic data are already showing a downward trend. If it falls into a deep recession, the impact on non-ferrous metal consumption will be huge.

2. US inflation got out of control, the Fed's monetary tightening exceeded expectations, and a strong dollar suppressed the price of equity assets. The US is unable to effectively control inflation and continues to raise interest rates. The Federal Reserve has raised interest rates drastically continuously, but services, especially rents and wages, seem to be sticking to the decline in inflation. If the Federal Reserve maintains a high level of interest rate hikes, it will be bad for non-ferrous metals denominated in US dollars.

3. Consumption growth in the domestic new energy sector fell short of expectations, and consumption in the real estate sector continued to be sluggish. Although policies on the real estate sales side have been liberalized to varying degrees, residents' willingness to buy is insufficient, and real estate companies' debt risk resolution is not progressing smoothly. If sales continue to not improve, the final end of the real estate will face the risk of stalling in the later stages, which will be detrimental to domestic consumption of some non-ferrous metals.