Silver-copper resonance, aluminum sector recovery—has the nonferrous metals sector kicked off a cross-year rally?

Silver and copper prices are surging strongly, igniting market expectations for a cross-year rally in the non-ferrous metals sector. Against the backdrop of tightening mid-term supply-demand structures and rising inflation expectations, the volatile trend of major metal prices may soon end, and a window for positioning in the non-ferrous metals sector is opening. On Monday this week, the price of silver broke through $57 per ounce for the first time in history. Silver futures on the New York Commodity Exchange also hit a new high of $57.81 per ounce. Copper prices also climbed higher. After the London Metal Exchange (LME) hit a record high of $11,210.5 per ton last Friday, copper prices continued to rise in the U.S. market on Monday, with Comex copper up 1% at $532.55 per pound. According to market data, capital is returning to the non-ferrous metals sector. During the week of November 24 to 28, the LME copper spot settlement price rose by 2.98% to $11,004 per ton, and the LME aluminum settlement price increased by 2.19% to $2,826 per ton. Domestically, the Shenwan non-ferrous metals sector rose by 3.37% during the week. According to Insider Trading Desk, Dongfang Securities said in a report on December 1 that market capital is repricing the scarcity of non-ferrous assets. Tight supply at the mining end, traditional expectations of interest rate cuts, and Trump’s signing of an order to start the AI research program known as the "Genesis Project" have further reinforced the long-term growth logic of copper demand driven by the downstream wave of data center construction. Concerns about short squeezes due to silver inventories dropping to nearly ten-year lows have brought physical scarcity of precious metals back into focus. Under the dual boost of supply-side reforms and demand-side increments, leading companies with resource advantages have become key targets for institutional cross-year positioning. Copper: Supply Premium Hits Historic High, Resonates with AI Demand On Monday, December 1, LME copper set a record high. Since late August, LME copper prices have risen by about 13%. Dongfang Securities stated that the core driver of copper price increases is more definite supply tightness and demand growth. Last Friday night, Chilean state-owned mining company Codelco sharply increased its copper premium for U.S. customers for 2026 to $350 per ton, a record high. This directly highlights the tight supply at the mining end and has driven copper prices up sharply. On the demand side, a new macro narrative has emerged. Trump has signed an order to start the AI research program known as the "Genesis Project," and the market widely expects the wave of downstream AI data center construction to further boost industrial demand for copper, continuously pushing up the price anchor. In the midstream smelting segment, industry order rectification is also improving corporate profit expectations. To address disorder in the industry stemming from zero smelting fees, the China Nonferrous Metals Industry Association has issued a strong oppositional signal and announced it has halted about 2 million tons of illegal capacity to curb overexpansion. Dongfang Securities analysis believes that as mid-term mining disturbances gradually abate and the industry strictly controls new smelting capacity, copper smelting fees can potentially improve, offering marginal improvement for midstream smelting enterprises' profitability. Silver: Physical Scarcity Outweighs Rate Cut Expectations Dongfang Securities believes that silver's strong performance is not solely driven by liquidity. Although, according to the CME FedWatch Tool, the probability of a 25BP Fed rate cut in December increased from 80.9% on November 24 to 85.4% on November 28, indicating deepening rate cut expectations, this may only serve as a market backdrop. The deeper driving force lies in the physical scarcity of precious metals. Currently, silver inventories at the Shanghai Gold Exchange and SHFE have dropped to their lowest levels since 2015, nearly a decade. Renewed signs of "short squeezes" in the silver market reflect this fundamental situation. A key trigger is China’s surge in exports. Data showed China’s silver exports in October exceeded 660 tons, a record high. Aluminum: Valuation Recovery Opportunity After Placement Shock Compared with silver and copper’s aggressive attributes, the electrolytic aluminum sector shows a defensive stance and subsequent recovery logic. Affected by the November 18 news that China Hongqiao Group intended to place up to 400 million shares, the sector recently saw a notable correction. However, Dongfang Securities believes that the decline was a “wrongful killing,” as the placement itself does not alter the overall supply-demand structure or the company’s profitability in the electrolytic aluminum industry. Taking Tianshan Aluminum as an example, the company’s valuation has decreased to about 8.5 times, a historically low level, based on current aluminum prices. Given that the impact on share dilution from the placement is relatively minor, and aluminum prices remain on a steady uptrend driven by growing demand, the electrolytic aluminum sector currently offers an opportunity to position at lows. ~~~~~~~~~~~~~~~~~~~~~~~~ The above outstanding content is from Insider Trading Desk. For more detailed explanations, including real-time interpretation, frontline research, and other content, please join [Insider Trading Desk · Annual Membership]. Risk Warning and Disclaimer Markets have risks, investment needs to be cautious. This article does not constitute personal investment advice and does not take into account individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are applicable to their situation. Investment based on this article is at your own risk.