Are non-ferrous metals falling out of the "golden pit"? The Industrial Non-Ferrous Metal ETF Wanjia (560860) had a net capital inflow of 124 million yesterday, ranking first in size and liquidity among peers, covering leading strategic resources in copper, aluminum, and rare earths.

Recently, the non-ferrous metals sector has experienced sharp adjustments, with the Industrial Non-Ferrous Metals Index retracing over 20% from its peak, leading to a temporarily pessimistic market sentiment. However, after a significant decline, it’s worth paying attention to the current sector’s valuation.

1. From a valuation perspective: Although the non-ferrous metals sector has seen considerable gains over the past year, the CSI Industrial Non-Ferrous Metals Theme Index remains at the 36.67th percentile over the past decade, indicating reasonable and relatively low valuation levels.

2. From a fundamental perspective: Short-term copper price fluctuations are influenced by Middle East conflicts. As geopolitical tensions ease, the supply-demand balance is expected to support further increases in copper prices.

Supply side: Increasing shortages of concentrates, ongoing reductions in smelting output, and a tightening supply landscape.

• Core contradiction: Copper mine supply is extremely tight, with processing fees hitting historic lows. Benchmark processing fees are set at $0, spot TC has fallen below -$68, and there’s no bottom in sight.
• Production performance: Global copper mine increments in 2025 are only 100,000 tons; overseas refined copper production has decreased by 350,000 tons. In 2026, Japanese and other smelters have announced reductions, with overseas cuts expected to be at least as large as 2025. Major copper projects like Grasberg and First Quantum are expected to resume production in 2026 without significant impact on supply.
• Other supplies: Recycled copper supply is constrained by policies such as Document No. 70, with no substantial increase expected in 2026. High copper prices provide limited incentives for increased supply; mining companies are more inclined toward mergers and acquisitions rather than expanding capacity. The disruption rate of copper mines reached a historic high of 6% in 2025 and is expected to stay the same or increase in 2026.

Demand side: Inventory reductions exceeding expectations, structural consumption differentiation, with power and transportation sectors as growth drivers.

• Inventory and consumption: Copper inventories hit a historic high after the Spring Festival, but recent social inventories have unexpectedly decreased to 520,000 tons. After copper prices fell below 100,000 yuan, downstream buying activity strengthened. Export orders improved with Middle East tensions easing, and terminal consumption shows signs of positive recovery.
• Consumption structure: China’s terminal copper consumption in 2026 is projected at 17.58 million tons, a slight year-on-year increase of 1.1%, with notable structural differences. Power (8 million tons, +4%) and transportation (1.77 million tons, +5%) are the main growth engines, while construction declined by 10%, and home appliances grew slightly by 0.8%. Copper consumption in electrical applications is 16.27 million tons, up 2.7% YoY, with significant increases in copper material imports and exports (+14%).

3. Summary and outlook: Four major narratives support copper prices

• Major powers’ strategic copper reserve expansion (e.g., US and China).
• Increasing demand from AI computing power and power grid construction.
• Reinforced logic of copper mine supply shortages.
• The market has already priced in the reduced rate of Federal Reserve rate cuts; absent continuous large rate hikes, macroeconomic risks are limited.

Recent oil price surges have suppressed the non-ferrous sector, but this is a correction rather than a cycle reversal. The global copper supply-demand balance remains tight, with core supply shortages persisting. Coupled with steady demand from AI, power, and transportation sectors, the medium- to long-term upward trend of copper prices is clear. As Middle East tensions ease, copper prices are expected to return to an upward cycle. Based on the 20-year cycle pattern, the upward cycle that began in 2019 is expected to continue until 2029.

4. How to efficiently position? Consider the Industrial Non-Ferrous Metals ETF Wanjia (560860).

As of March 25, this ETF is the largest (over 10 billion yuan in assets) and most liquid ETF tracking the Industrial Non-Ferrous Metals Index, and it is the only one with margin trading and interconnectivity features—making it a sharp tool to capture sector rebounds.

In terms of size, the ETF’s latest assets under management are 10.43 billion yuan, ranking first among ETFs tracking the CSI Industrial Non-Ferrous Metals Theme Index, and it is the only product exceeding 100 billion yuan (data from Wind). Over the past year, its assets have grown by 9.85 billion yuan, the fastest among similar ETFs.

In liquidity, the average daily trading volume over the past month is 690 million yuan, making it the most liquid ETF tracking the index (data from Wind).

In terms of performance, the ETF has gained 83.95% over the past year, ranking first among similar products, making it a high-elasticity choice for capturing non-ferrous metal market opportunities (data from Wind).

The ETF saw a net inflow of 124 million yuan on the previous trading day. Over the past three months, it has had a net inflow of 2.126 billion yuan; over six months, 5.819 billion yuan; and over the past year, 8.292 billion yuan.

Its excess return over the past year is 3.62%, the highest among ETFs tracking the CSI Industrial Non-Ferrous Metals Index (data from Wind).

Launched on February 22, 2023, this ETF is the first in the market to track the CSI Industrial Non-Ferrous Metals Index and is the only one with interconnectivity features, likely attracting Northbound capital inflows.

Additionally, the ETF is the only one with margin trading available among similar products, with recent margin buy-in reaching 18.45 million yuan and a latest margin balance of 152 million yuan, indicating continued leverage accumulation (data from Wind).

The ETF closely tracks the CSI Industrial Non-Ferrous Metals Index, covering key resources such as copper, aluminum, rare earths, tungsten, molybdenum, cobalt, nickel, titanium, lead, and zinc. The index combines “industrial backbone” resources (copper, aluminum) with “new material kings” (rare earths, cobalt, nickel), making it an efficient tool to precisely grasp sector trends. In the index’s constituent stocks, copper accounts for 32.1%, aluminum 18.7%, the highest proportions among related indices.

The management fee for the ETF is 0.50%, with a custody fee of 0.10%, among the lowest in comparable funds (data from Wind).

The ETF’s on-market code is 560860. Off-market investors can participate via the connect funds (Wanjia CSI Industrial Non-Ferrous Metals Theme ETF Launch Connect A: 018489; Launch Connect C: 018490).