China Galaxy Securities: Profitability resilience highlights continued high growth in nonferrous metals performance
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that the shortage of supply at the mine side continues to ferment and spread to the smelter side. The implementation of US copper tariffs on refined copper will soon exacerbate regional copper shortages, and the continued removal of domestic fine copper will drive copper prices to continue to rise. Pessimistic liquidity expectations have been fixed, and the rise in US debt and dollar credit problems has driven the price of gold to bottom up. As the “gold nine silver ten” peak season comes, domestic inventories continue to be removed to support aluminum prices. El Niño may disrupt the commissioning of additional electrolytic aluminum production capacity in Southeast Asia to ease supply concerns. The AI infrastructure investment industry continues, and the boom in strategic metal resources and new materials such as tungsten, tantalum, rare earth, and nickel powder upstream of the industrial chain is expected to continue to rise.
The main views of China Galaxy Securities are as follows:
Resilience is highlighted, and the 2026Q2A non-ferrous metals industry's performance growth rate continues to grow at a high rate
Market optimism about macroeconomic expectations and liquidity in early 2026, as well as increased competition for key strategic metals and supply chain reshaping by major countries, pushed nonferrous metal commodity prices and the A-share nonferrous metals sector to continue to rise. However, the Middle East conflict escalated in March, and rising oil prices boosted inflation. Market concerns about whether the Federal Reserve's loose monetary policy could continue, and increased uncertainty about the future economy caused non-ferrous metal prices to adjust at a high level. However, the long-term rise in non-ferrous metal prices throughout 2025 still caused the A-share nonferrous metals industry's performance in the first half of 2026 to rise sharply year-on-year due to the base effect. Specifically, the A-share nonferrous metals industry's revenue for the first half of 2026 increased 31.61% year on year, and the performance increased 103.22% year on year; the revenue of the A-share nonferrous metals industry increased 26.05% year on year in the 2026Q2 single quarter, and the performance increased 96.76% year on year.
Profitability continues to improve, and the overall ROE level of the 2026Q2A non-ferrous metals industry rose to a record high month-on-month, mainly due to an increase in the industry's overall sales margin
The overall ROE of the A-share nonferrous metals industry rose from 4.76% in 2026Q1 to 5.00% in 2026Q2, up 0.24 percentage points from month to month. Among them, the overall sales profit margin of the A-share nonferrous metals industry increased from 8.04% to 8.27%, affecting the increase in ROE by 0.14 percentage points, which is the core factor for the increase in the overall ROE level of the non-ferrous metals industry in 2026Q2. Furthermore, the overall equity multiplier for the A-share nonferrous metals industry rose from 2.03 in 2026Q1 to 2.05 in 2026Q2, increasing the ROE level by 0.05 percentage points. Meanwhile, the overall asset turnover ratio of the A-share nonferrous metals industry rose from 0.291 in the first quarter of 2026 to 0.295 in the second quarter of 2026, raising the ROE level by 0.05 percentage points. The overall gross margin of the 2026Q2A share nonferrous metals industry recorded 18.10%, up 1.35 percentage points from 2026Q1, which was the main reason for the increase in sales profit margin of the A-share nonferrous metals industry in the second quarter of 2026.
2026Q2A shares The overall operating cash flow situation of the non-ferrous metals industry continues to improve
The overall net operating cash flow of the A-share nonferrous metals industry in 2026Q2 increased 11.58% year-on-year compared to 2025Q2 and 23.19% month-on-month compared to 2026Q1. Meanwhile, the overall operating cash flow of the A-share nonferrous metals industry accounted for 7.88% of operating income in 2026Q2, an increase of 1.05 percentage points over the previous month. The operating cash flow of the 2026Q2 industry increased year-on-year compared to 2025Q2, and the overall net operating cash flow of the A-share nonferrous metals industry achieved year-on-year growth for two consecutive quarters after 2025Q4, indicating that the cash situation of non-ferrous metals companies continued to improve.
Risk warning: 1) the risk that domestic macroeconomic recovery will fall short of expectations; 2) the risk that the Fed's monetary policy will be tightened and interest rate hikes will exceed expectations; 3) the risk of a sharp decline in non-ferrous metal commodity prices; 4) the risk that the Middle East geopolitical conflict will continue to ferment and evolve beyond market expectations.