The Zhitong Finance App learned that CICC released a research report saying that the share of green demand in the downstream demand structure for copper and aluminum has changed from quantitative to qualitative change. If 2024 prices are rushing under strong expectations, then 2025 may usher in substantial improvements in supply and demand. The structural highlights and sound fundamentals of demand will help non-ferrous metals cross the macro-cycle, and stability can only go far. Although it is difficult to avoid repetition, non-ferrous prices are likely to have begun a long-term upward upward trend.

CICC's main views are as follows:

On the one hand, the US economy”soft landing” It can be expected that domestic policies for steady growth have been strengthened, and the macroeconomic environment in China and the US is evolving towards favorable prices. On the other hand, the long-term narrative of limited supply at the copper mine end due to insufficient historical capital expenditure continues, and the conflict between mining and metallurgy still exists. Even the traditional aluminum industry chain, where raw materials are relatively loose, faces the risk of a game between the mining side and the smelting side over the dominance of the alumina industry, leading to supply chain friction.

The greatest common denominator between copper-aluminum balance sheets: the increase in new energy sources continues to hedge against traditional demand headwinds.

New energy demand for copper and aluminum may soon enter a “high base, high incremental” stage. The share of green demand (photovoltaics, wind power, new energy vehicles) in the 2025 copper balance sheet has surpassed construction demand (19.4% vs. 15.5%); in the aluminum balance sheet, the share of green demand (photovoltaics, UHV, new energy vehicles) is basically in line with construction demand (20.8% vs. 20.9%). Although the dispute over consumption gradually became more prominent, China's installed capacity growth rate is facing downward pressure. However, from another perspective, the rapid growth in PV installations in the previous two years and the resulting shortfall in consumption capacity meant there was room for long-term growth in power grid investment. It is expected that demand for new energy grid-connected energy will continue to be the main driving force for domestic grid investment growth in 2025, which is beneficial to copper and aluminum cable consumption.

The macroeconomic environment of China and the US is evolving in both directions favorable to prices.

The US interest rate cut cycle has begun, the overall economic data performance is steady, and the “soft landing” will become the benchmark situation in our outlook. Based on statistics on the nine US interest rate cut cycles since 1970, we found that on average, the US manufacturing PMI began to pick up 7 months after the first rate cut was implemented; in preventive interest rate cuts, this time lag did not make much difference, but they all crossed the 50 boom and dry line. Applying this cycle of interest rate cuts, we expect the US manufacturing boom to improve substantially in the second quarter of next year. At the same time, the US manufacturing industry is returning back and may have entered the equipment investment stage. However, as an important foundation for the manufacturing industry, the US power grid faces problems of aging facilities and insufficient connectivity, which may drive the increase in copper and aluminum cable consumption.

On the domestic side, steady growth policies are frequent, and it is expected that the 6+4 trillion yuan debt amount will release local financial resources for physical investment.

At the same time, the press conference also proposed that a more active fiscal policy will be implemented next year, which includes increasing support for the “two new” (large-scale equipment renewal and consumer goods trade-in). The boosting effect of the “Two New” on non-ferrous metals demand has been reflected this year, and it is expected that it will continue to be an important growth factor next year.

The conflict between mining and metallurgy will continue, which also highlights the alternative value of recycled metals.

In 2025, thanks to the commissioning of Malmyzhskoye, increased production in Las Bambas, and increased production of projects such as Kamoa-Kakula3, QB2, Oyu Tolgoi, and TFM, the copper concentrate supply growth rate is expected to rise back to 2.6% from 1.8% in 2024. The smelting side's capacity growth rate will still be greater than that of the mining side, and the supply and demand for copper concentrate will remain tight. However, the supply of copper scrap was marginally relaxed or the pressure on smelters to cut production was relieved. In the aluminum industry chain, judging from production capacity, the pressure on the supply of bauxite and alumina will indeed ease somewhat next year.

However, the concentration of bauxite resources is high, and in recent years, bauxite suppliers such as Indonesia and Guinea may also become a new source of conflict in mining and metallurgy in the future. In this case, the importance of recycled metals is even more prominent. With the relaxation of import standards for scrap copper and aluminum raw materials, the supply of recycled copper and aluminum smelting raw materials is expected to be marginally relaxed.

Copper: Although it has a zinc base, it is better to wait.

Structural highlights will support copper demand in the coming year. On the one hand, the continued increase in the share of new energy will hedge against the negative impact of the downturn in real estate; on the other hand, although the installed growth of scenery is facing a slowdown, the resulting consumption demand is more sustainable, driven by power grid investment. However, supply resilience in smelters may be a downside risk that cannot be ignored. It is estimated that in 2025, the global refined copper surplus will narrow from 0.46 million tons in 2024 to 0.31 million tons, while copper concentrate will still maintain a shortage on the smelting side. The LME copper price range is expected to be between 9,500 and 10,500 US dollars/ton in 2025.

Aluminum: Supply is difficult to accelerate, and demand can still be expected.

The energy transition process will affect both the supply and demand sides of aluminum, so it may benefit more than other metals. The unique highlight on the aluminum demand side is that with the landing of major scenic bases one after another, downstream UHV is also expected to usher in a new round of construction peak. However, it may be difficult to accelerate the increase in the supply of electrolytic aluminum. First, due to restrictions on own production capacity, the red line of domestic production capacity is gradually getting closer, while new overseas production capacity is facing electricity restrictions, and the release is slow. In addition, uncertainty about the supply of raw materials has also increased due to the intensification of the resource game. It is expected that the global shortage of electrolytic aluminum will continue to be small in 2025, and the price of aluminum will rise to 2,800-2,900 US dollars/ton. The price of alumina may rise and fall back to 4,000 yuan/ton after 2Q.