HSBC Research is most optimistic about aluminum in the Chinese materials sector, urging a buy on CHINAHONGQIAO and CHALCO

HSBC Research released its monthly commodity research report, pointing out that strong demand and tight supply have kept base metal prices robust. Considering the tight balance between supply and demand in the market, there may be further upward price risks. Among the materials sector in China, the bank is most optimistic about aluminum; in the current macro context, it is also bullish on gold; at the same time, it holds a positive view on the long-term prospects of building materials.

HSBC Research indicates that looking ahead to next year, the fundamentals of the aluminum industry are trending solid, coupled with China's capacity cap limiting domestic supply growth, while new overseas supply remains moderate. It is expected to grow by 0.5% and 3% year-on-year, respectively, leading to upward revisions of aluminum price forecasts for 2026 and 2027. The Shanghai Futures Exchange aluminum price forecast is expected to reach RMB 22,000 and RMB 23,000 per ton, while the London Metal Exchange price forecasts are USD 2,750 and USD 2,850 per ton, respectively.

The export ban on cobalt from the Democratic Republic of the Congo continues, and the proposed quota system has not yet been implemented. HSBC Research believes that the ban has driven cobalt prices to rebound from low levels this year, having doubled since the beginning of the year, and it is believed that prices will continue to be supported in the short to medium term.

The bank currently prefers aluminum stocks in the materials sector in China, expecting that low inventory and a capacity cap of 45 million tons will provide good support for aluminum prices. It is also optimistic about the long-term prospects of gold and building materials, giving "Buy" ratings to China Hongqiao (01378.HK) and Aluminum Corporation of China (02600.HK), with target prices of HKD 37.4 and HKD 12.3, respectively. The bank also gives "Buy" ratings to Zhaojin Mining (01818.HK), Shandong Gold (01787.HK), and Zijin Mining International (02259.HK)