As the interim reporting season for 2026 draws to a close, the nonferrous metals industry, standing at the center of the commodities bull market, has delivered an impressive performance. According to Wind data, the Shenwan nonferrous metals sector achieved a combined net profit attributable to shareholders of RMB 142.544 billion in the first half of the year, up 49.90% year-on-year, placing its growth rate among the top tiers of Shenwan first-level industries. During the same period, the sector's operating revenue totaled RMB 1.58 trillion, a decline of 13.72% from a year earlier. Behind this divergence of falling revenue and rising profit lies a systematic uplift in metal price benchmarks, while the concentrated surge in emerging demand from AI computing power and new energy is carving out a second growth curve for the industry beyond the traditional real estate and infrastructure cycle.

Rising Price Benchmarks Drive Profit Elasticity Despite Revenue Dip

The contrasting movements in revenue and profit serve as the first lens for interpreting the earnings breakout this cycle. Data from the China Nonferrous Metals Industry Association provides a broader perspective: in the first half, industrial enterprises above designated size in the nonferrous sector posted total profits of RMB 418.39 billion, a 94.0% year-on-year increase, with profit growth ranking among the forefront of industrial sectors. For A-share companies, the direct driver of concentrated profit release has been the systematic rise in metal price benchmarks. During the first half, LME copper prices traded at elevated levels around $13,600 per tonne, with a year-to-date gain of approximately 7.70%, though still below the historical peak of $14,527.5 per tonne set in January. The price benchmark was clearly higher than the same period in 2025, with SHFE copper averaging RMB 102,236 per tonne in the first half. Lithium carbonate prices rebounded from around RMB 130,000 per tonne at the start of the year to roughly RMB 163,000 per tonne by end-June, a gain of about 25%; praseodymium neodymium oxide rose from approximately RMB 615,000 per tonne to about RMB 750,000 per tonne, up around 21%. These price increases directly lifted gross margins for miners and smelting operations. As for the revenue contraction, it was mainly attributable to compressed trading income at some companies and a simultaneous decline in volume and price in the precious metals segment, factors that are structural rather than trend-based.

Energy Metals Lead Sub-Sector Divergence; Industrial Metals Contribute Nearly 80% of Profits

By segment, the industry reveals clear structural divergence. Energy metals led the five major sub-sectors with a net profit growth rate of 206.69%, recording net profits of RMB 7.519 billion in the first half. Lithium carbonate prices have rebounded over 150% cumulatively from the 2025 low, and combined with the scaling-up of energy storage demand, lithium mining companies have fully unleashed their earnings potential. For instance, Tianqi Lithium is expected to report net profits attributable to shareholders of RMB 2.85 billion to RMB 4.25 billion for the first half, a year-on-year surge of 3276% to 4935%. Industrial metals serve as the industry's profit anchor, posting first-half net profits of RMB 111.753 billion, up 59.19% year-on-year, accounting for approximately 78% of the sector's total profits. The minor metals segment delivered net profits of RMB 15.178 billion, up 57.46%, with China Tungsten and Hightech growing 270.74%, Xiamen Tungsten up 124.79%, and China Northern Rare Earth rising 96.98%. Precious metals was the only sub-sector to see profit contraction, dragged down by the earlier pullback in gold prices from elevated levels; first-half net profits fell to RMB 5.476 billion, down 43.47% year-on-year. Metal new materials posted net profits of RMB 2.617 billion, a decline of 15.89%.

Copper and Aluminum Giants Dominate Profit Rankings; Growth Surprises Abound

At the individual company level, copper and aluminum leaders firmly occupy the top spots in the profit rankings. Zijin Mining led with net profits attributable to shareholders of RMB 39.17 billion, up 73.90% year-on-year, driven by across-the-board volume growth in mined gold, mined copper, and lithium carbonate equivalent. CMOC Group (RMB 16.152 billion, up 87.44%) and Jiangxi Copper (RMB 8.632 billion, up 115.08%) followed in second and third place. The top three copper companies together contributed net profits of RMB 63.954 billion, representing 53.6% of the top-20 profit list. The aluminum segment delivered on the "volume and price rising together" logic: Hongqiao Holdings posted net profits of RMB 15.645 billion, up 68.62%; Henan Shenhuo grew 170.07%, Tianshan Aluminum rose 99.81%, and Zhongfu Industry climbed 191.12%. In the first half, aluminum industry profits surged approximately 115% year-on-year, accounting for 39% of the total nonferrous metals industry profits. The growth champions on the leaderboard mostly emerged from the minor metals and aluminum segments. Beyond China Tungsten and Hightech, Zhongfu Industry, and Henan Shenhuo, Zhuzhou Smelter Group saw net profits jump 230.42% year-on-year. During the price upcycle, advantages at both the resource end and the cost end are being magnified multiple times over.

Demand Shift: AI Computing Power and New Energy Take Over as the Second Growth Curve

The most profound change in this nonferrous metals bull market has occurred on the demand side. Unlike the traditional cycle around 2006, which was driven by real estate and infrastructure, CITIC Securities characterizes this round as a "new quality productive forces bull market" — new energy, AI computing power, military and aerospace, and other emerging fields have replaced the property chain as the core engine of demand. The pull from AI computing power is becoming increasingly evident. According to data from the China Nonferrous Metals Industry Association, demand for "computing metals" exploded in the first half: tin prices rose 40% within six months, tantalum prices gained 158%, and indium prices advanced 60%. New AI data center installations are expected to grow 117% year-on-year, with copper usage intensity per unit of computing power rising significantly. Orient Securities estimates that from 2025 to 2028, global data center copper demand will average approximately 1.8 million tonnes annually, accounting for 6% of global copper consumption. Copper, aluminum, tin, and other varieties are shifting from traditional industrial commodities to "tech metal" pricing. New energy demand, meanwhile, provides resilient support at the bottom. Energy storage sector growth is running at 50% to 55%, poised to surpass new energy vehicles as the primary growth engine for lithium demand. Global lithium battery demand is projected to reach 2,886 GWh in 2026, up 30% year-on-year. Export demand is also contributing: in the first half, China's goods trade imports and exports grew 16.9% year-on-year, with high-tech product exports reaching RMB 3.26 trillion, up 39%, directly boosting end-consumption of copper, aluminum, and lithium.

Supply Rigidity: Profits Accelerate Toward Upstream Concentration

The sustained high price levels are equally explained by rigid supply constraints. For copper mines, global capital expenditure has remained depressed since peaking in 2013, and the irreversible decline in ore grades continues. In 2026, long-term copper concentrate treatment charges have fallen to zero, placing the industry in a "zero TC/RC" phase, forcing smelters to proactively cut capacity. For electrolytic aluminum, domestic capacity is constrained by the 45-million-tonne policy ceiling, with capacity utilization already exceeding 96%. Conflicts in the Middle East have caused large-scale production halts in the region, with downtime expected to last 6 to 12 months. The global supply-demand gap for electrolytic aluminum could widen to the million-tonne level in 2026, and LME aluminum inventories have already fallen below 320,000 tonnes, hitting a nearly two-decade low. Lithium supply has also faced disruptions, with four lepidolite mines in Yichun, Jiangxi, halting production due to license renewals, and African lithium mine transport cycles being disrupted. Under these supply constraints, industry profits are accelerating toward upstream concentration. As a research report from China Chengxin International notes, depressed treatment charges are squeezing the smelting and processing segment, with profits further concentrating toward companies with high resource self-sufficiency rates and strong cost-control capabilities. Henan Shenhuo, which operates an integrated "coal-power-aluminum" chain, saw net profits grow 170%, while Nanshan Aluminum, facing cost pressures, declined 26.36% — a clear illustration of divergence within the same segment.

H2 Outlook: Institutional Bullishness Remains Intact

Looking ahead to the second half, mainstream institutions broadly agree on the continuation of the current high prosperity. CITIC Securities recommends focusing allocation across six major sectors: copper, lithium, rare earths, aluminum, gold, and strategic metals. China Galaxy Securities believes "the commodity bull cycle is still in progress, and pullbacks represent opportunities for continued upside." Ping An Securities judges that copper and aluminum fundamentals are poised for sustained improvement with a fluctuating upward price trend. Bohai Securities maintains its "overweight" rating on the industry. On price targets, Goldman Sachs has raised its end-2026 LME copper target to $13,735 per tonne, while JPMorgan has set a bullish target of $15,000 per tonne. UBS has raised its 2026 average lithium carbonate price forecast to RMB 150,000 per tonne. Risks, however, cannot be ignored: if the Federal Reserve tightens monetary policy more aggressively than expected, Middle East geopolitical conflicts escalate, global economic growth slows, or supply-side releases exceed expectations, the upward trajectory of metal prices could be interrupted. Changes in trade policies such as US tariffs on refined copper imports could also disrupt global trade flows and pricing systems.