Focus again on non-ferrous metals after the decline

Took a photo of two cats fighting at home. Upon closer look, it's quite vivid. Everyone can take a look: in the picture, who is Iran, who is the US, and who is the Eastern Power watching closely from behind.

Back to the main topic, two major aluminum plants in the UAE and Bahrain were attacked by Iranian drones over the weekend. They are currently assessing the production reduction losses. This mainly involves electrolytic aluminum, because once the electrolytic cells for aluminum production are shut down, it's difficult to restart them quickly. This highlights that non-ferrous metals, somewhat like oil, have vulnerabilities and disruptions on the production side.

However, we cannot ignore the demand for physical metals driven by AI and other factors just because of the recent war. These demands are real. It's just that some demand might be delayed in the short term, but it won't disappear. Combined with production-side disruptions, this makes non-ferrous metal prices prone to rise and hard to fall.

The previous significant drop was due to high earlier valuations and the tightening of US dollar liquidity some time ago, leading to a certain decline. However, from a medium-term perspective, non-ferrous metals still have potential, and non-ferrous metals are suitable in a portfolio, acting as a partial hedge alongside crude oil.

So I also observed that the Watchmaker Active Alpha Investment Advisor Portfolio I co-invest in with Guolian Minsheng Securities still maintains a relatively high allocation to non-ferrous metals and hasn't made significant reductions. This likely indicates a relatively optimistic view on the future performance of cyclical sectors like non-ferrous metals and chemicals.

(Not investment advice)

$Guotai CSI Non-ferrous Metal ETF(159881.SZ) $Wanjia CSI Industry Non-Ferrous Metal Theme ETF(560860.SH) $Penghua CSI Subdivision Chemical Industry Theme ETF(159870.SZ)  $Harvest Crude Oil Fund(QDII-LOF)(160723.SZ)