The Middle East’s largest aluminum company has been forced to suspend smelting! The leading aluminum industry stocks are leading the gains, with Yunnan Aluminum shares up more than 4%! Huabao Fund’s Non-Ferrous Metals ETF (159876) previously attracted 13.71 million yuan over the past two days.

Today (April 2nd), the market consolidates, with major A-share indices all drifting lower. The Color ETF Huabao (159876), which includes leading companies in the non-ferrous metals industry, experienced a slight pullback along with the market, with intraday prices down by 0.48%. From the daily candlestick chart, since the recent low on March 23rd, it may have moved out of a sideways upward step.

It is worth noting that the Color ETF Huabao (159876) has continued to attract 13.71 million yuan in inflows over the past two days, possibly indicating that funds are optimistic about the non-ferrous metals sector’s future performance and are actively positioning!

Regarding constituent stocks, aluminum industry leaders are notably leading the gains, with Yun Aluminum rising over 4%, Shenhuo, Zhongfu Industrial, China Aluminum, and Tianshan Aluminum up more than 2%, while Nanshan Aluminum and Mingtai Aluminum are also climbing. Additionally, lithium industry leaders are also active against the trend, with Tianqi Lithium, Ganfeng Lithium, and Shengxin Lithium Energy gaining.

On the news front, after its plant was attacked by missiles and drones from Iran last weekend, the largest aluminum producer in the Middle East, Emirates Global Aluminium, which has a major smelter in Abu Dhabi, has been forced to suspend operations. Following the news, London Metal Exchange’s intraday aluminum futures prices surged about 2%, and prices of other industrial metals like copper also strengthened. This round of shocks has spilled over from the energy sector to the industrial metal supply chain, raising concerns about “supply shocks + inflation resurgence.”

Natixis SA analyst Bernard Dahdah hypothesized in a recent report that the damage caused by metal solidification during the smelting process may take at least a year to repair. This could turn a surplus of 200k tons in aluminum next year into a supply gap of about 1.3 million tons.

CITIC Securities states that with the renewed conflict between Israel and Palestine, the risks to aluminum capacity, shipping, and energy supply in the Middle East have significantly increased. The subsequent production disruptions in the Middle Eastern aluminum industry chain and even the risk of overseas secondary energy crises cannot be ignored. Reviewing the energy crisis of 2021-2022, aluminum prices and the sector saw gains of up to 60%/100%. Looking ahead, concerns about supply in the aluminum industry chain may intensify, potentially leading to price increases beyond previous expectations. Coupled with the long-term supply and demand fundamentals remaining strong, we continue to favor the valuation and price rise prospects of the aluminum sector.

【The non-ferrous metals boom has arrived, the “super cycle” is unstoppable】

Color ETF Huabao (159876) and its linked funds (A: 017140, C: 017141) track indices that comprehensively cover copper, aluminum, gold, rare earths, lithium, and other industries, including precious metals (hedging), strategic metals (growth), and industrial metals (recovery), spanning different economic cycles. Full category coverage allows for better capture of the overall sector’s beta trend. Meanwhile, this ETF is also a margin trading and short-selling target, serving as an efficient tool for one-click exposure to the non-ferrous metals sector.

As of the end of February, the latest size of the Color ETF Huabao (159876) was 200k yuan, with an average daily trading volume of over 1 billion yuan in the past month. Among the three ETFs tracking the same index in the market, it leads in both size and liquidity.

Note: The previous intraday abbreviation for Color ETF Huabao (159876) was “Non-ferrous Leader ETF.”

Reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should invest rationally based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.

Risk warning: Color ETF Huabao passively tracks the CSI Non-ferrous Metals Index, which has a base date of December 31, 2013, and was launched on July 13, 2015. The index’s constituent stocks are adjusted periodically according to the index rules. Its backtested performance does not predict future results. The constituent stocks shown here are for illustration only; descriptions of individual stocks are not investment advice and do not reflect holdings or trading activity of any funds managed by the manager. The fund’s risk level is assessed as R3—medium risk, suitable for balanced (C3) and above investors. Suitability matching opinions are subject to the sales institution. All information in this article (including but not limited to stocks, comments, forecasts, charts, indicators, theories, or any other statements) is for reference only; investors are responsible for their own investment decisions. The views, analysis, and forecasts in this article do not constitute investment advice, and the manager is not responsible for any direct or indirect losses resulting from the use of this content. Fund investments carry risks, and past performance does not guarantee future results; the performance of other funds managed by the manager does not guarantee the performance of this fund. Invest cautiously.

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