Silver and copper resonance, aluminum sector recovery, is the non-ferrous sector starting a year-end rally?

Silver and copper prices have surged strongly, igniting market expectations for a year-end rally in the non-ferrous sector. Against the backdrop of tightening mid-term supply and demand dynamics and rising inflation expectations, the volatile trend of major metal prices may soon come to an end, and the layout window for the non-ferrous metal sector is opening.

On Monday, the price of silver broke through $57 per ounce for the first time in history, with silver futures on the New York Mercantile Exchange reaching a new high of $57.81 per ounce. Copper prices also rose. After hitting a historical high of $11,210.5 per ton on the London Metal Exchange (LME) last Friday, copper prices continued to rise in the U.S. market on Monday, with Comex copper prices increasing by 1% to $532.55 per pound.

From market data, funds are flowing back into the non-ferrous sector. From 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. The domestic Shenwan non-ferrous sector rose by 3.37% during the week.

According to news from the Chasing Wind Trading Desk, Dongfang Securities stated in a report on December 1 that market funds are re-pricing the scarcity of non-ferrous assets.

The tight supply at the mining end, traditional expectations for interest rate cuts, and Trump's signing of an order to launch an AI research program called "Genesis Project" further reinforce the long-term growth logic of copper demand driven by the wave of data center construction downstream. The concerns over short squeezes triggered by silver inventories falling to near ten-year lows have also brought the physical scarcity attributes of the precious metals sector back into focus. With the dual benefits of supply-side reform and demand-side increments, leading stocks with resource advantages are becoming the key focus for institutional year-end layouts.

Copper: Historical High Supply Premium Resonating with AI Demand

On Monday, December 1, London copper reached a record high. Since the end of August, LME copper prices have risen by about 13%. Dongfang Securities stated, the core driving force behind the rise in copper prices comes from more certain supply tightness and demand increments.

Last Friday evening, Chile's state-owned copper company Codelco significantly raised the copper premium it offers to U.S. customers for 2026 to $350 per ton, setting a historical high. This signal directly highlights the tight supply pattern at the mining end, driving copper prices sharply upward.

On the demand side, a new macro narrative has emerged. Trump has signed an order to launch an AI research program called "Genesis Project," and the market generally expects that the wave of data center construction downstream will further enhance industrial demand for copper, thereby continuously pushing up the central price of copper.

At the midstream smelting end, the rectification of industry order is also improving corporate profit expectations.

In response to the chaotic situation of zero smelting fees, [the China Nonferrous Metals Industry Association has issued a strong opposition signal](https://wallstreetcn.com/articles/3760160? keyword=has color), and it has been reported that approximately 2 million tons of illegal production capacity have been halted to curb excessive expansion.

DFZQ analysis believes that as mid-term disturbances at the mining end gradually dissipate, and with strict control over new smelting capacity in the industry, there is room for improvement in copper smelting fees, and the profitability of midstream smelting enterprises may see marginal improvement.

Silver: Physical Scarcity Overwhelms Rate Cut Expectations

DFZQ believes that the strong performance of silver is not solely driven by liquidity.

Although, according to CME FedWatch Tool data, the market's probability of a 25 basis point rate cut by the Federal Reserve in December has increased from 80.9% on November 24 to 85.4% on November 28, indicating that rate cut expectations are deepening, this may just be the backdrop for the market.

The deeper driving force lies in the physical scarcity of precious metals.

Currently, the silver inventories at the Shanghai Gold Exchange and the Shanghai Futures Exchange have both fallen to their lowest levels in nearly a decade since 2015, and the renewed signs of "short squeezing" in the silver market reflect this fundamental situation. Moreover, China's export surge is a key triggering factor. Data shows that China's silver exports exceeded 660 tons in October, setting a historical record.

Aluminum: Valuation Recovery Opportunity After Placement Turmoil

Compared to the offensive attributes of silver and copper, the electrolytic aluminum sector exhibits defensive characteristics and subsequent recovery logic. Following the news on November 18 that China Hongqiao plans to place up to 400 million shares, the sector has recently experienced a noticeable pullback.

However, DFZQ believes that this decline is a "misjudgment," as the placement itself does not change the overall supply-demand pattern of the electrolytic aluminum industry or the profitability of the enterprises.

Taking Tianshan Aluminum as an example, based on current aluminum prices, its enterprise valuation has fallen back to around 8.5 times, a historically low level. Considering that the dilution effect of the placement on the stock price is minimal, and with aluminum prices still in a continuous upward channel driven by demand growth, the electrolytic aluminum sector currently presents an opportunity for low-level positioning