CITIC Construction Investment: US Non-agricultural Agriculture falls short of expectations to help NK continue to fight back
The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that last week, non-ferrous prices remained strong against the backdrop of supply-side disruptions, acceptable consumption, and easing expectations of interest rate hikes in the US. Gold prices hit a new high in 7 weeks, copper prices hit a record high, and aluminum prices regained the 24,000 mark; on the other hand, the extreme market style was rebalanced. The low-profile colored sector continued to attract capital inflows with its excellent performance and low PE. The bank believes that non-ferrous commodity prices are expected to maintain a strong momentum, driven by excellent fundamentals; non-ferrous equity currently has insufficient PE repair, and there is still room for further growth.
CITIC Construction Investment's main views are as follows:
Gold: Weak employment data in the US dollar weakened expectations of interest rate hikes, and the price of gold hit a seven-week high. The July US non-farm payrolls data released on Friday unexpectedly fell by 23,000, after economists predicted that the number of employed people would increase by 80,000. The unexpected decline in non-farm payrolls reduced the possibility of interest rate hikes during the year. According to the Federal Reserve's observation tool, traders think the possibility that the US will raise interest rates in September is about 44%, compared to 57% before the report was released. Expectations of interest rate hikes during the year have cooled down, helping the price of gold to rebound. In the medium to long term, the structural expansion of major economies' deficits, strategic purchases of funds by central banks, and the intensification of geographical conflicts have all continued to maintain a premium on the sovereign credit system. According to the “2026 Global Central Bank Gold Reserve Survey” published by the World Gold Council, 89% of central bank reserve managers expect that global central bank gold reserves will continue to increase in the next 12 months.
Copper: The C-L price spread widened, non-US inventories were siphoned off again, and copper prices hit a record high. Since 630, the Comex-LME spread has been widening, highlighting the market's bet on 930 US President's announcement of additional tariffs on copper. As the C-L price spread widened, the arbitrage behavior of moving goods to the US increased. Inventories in non-US regions continued to decline, and spot stocks became more tight, and LME copper (0-3) rose to 115 US dollars/ton. The Democratic Republic of the Congo (DRC) banned the export of copper concentrate. In the first quarter of 2026, the country exported 18,900 metal tons of copper concentrate. Although the amount was small, the reflected resource protectionism heightened market concerns about supply stability. The increase in global copper mining this year has once again fallen short of expectations. Some leading mining companies have revised their copper output guidelines. Spot TC for copper concentrate is already as low as -173 US dollars/ton. Non-US inventories are low, impact resistance is weak, expectations of combined interest rate hikes have weakened, and copper prices are about to hit a record high.
Aluminum: Inventory declined from quantity to quality, and aluminum prices tried to temporarily stabilize the 24,000 yuan mark. This week, LME aluminum closed up 2.3%, and domestic inventories officially fell below 1 million tons. Combined, the overall upward atmosphere of non-ferrous metals was good, which supported aluminum prices. During the year, production capacity in the Middle East was cut by 2.86 million tons, and Mozambique shut down production capacity by 520,000 tons. As a result, global electrolytic aluminum supply gap of 1.2 million tons occurred during the year. Domestic and foreign inventories continued to disappear. Domestic inventories will soon fall below the 900,000 ton mark, and LME inventories will drop below 250,000 tons. Production has begun to resume in the Middle East, and more attention is being paid to putting into operation millions of tons of additional production capacity overseas, but these are all future production increases, and it is difficult to resolve the reality of shortages during the year. The short-term gap will drive a rebound in aluminum prices, and the outstanding performance of aluminum companies will drive the recovery of aluminum-related standards.
Risk Alerts
1. The global economy has declined sharply, and consumption has shrunk in a cliff-style manner. The World Bank raised the 2026 global economic growth forecast from 2.3% to 2.6% in its newly released “Global Economic Outlook”, but economic growth has been slowing in recent years. If the global economy falls into a deep recession, it will have a huge impact on non-ferrous metal consumption.
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.