Aluminum, Copper, and Nickel Enter a Critical Period of Transformation! Lightweighting and Computing Power Innovation Drive the Restructuring of the Metal Landscape

With the continuous recovery of the global economy and the emergence of new technologies, the demand for non-ferrous metals has surged. Particularly, aluminum, copper, and nickel, which are considered critical metals in the energy transition, will continue to play significant roles in lightweighting, computing power enhancement, and new energy transformation, with broad growth prospects. Meanwhile, niche metals like cobalt and lithium experience fluctuating demand due to technological iterations. It is important to note that geopolitical conflicts and cyclical fluctuations remain risks that miners must face. Currently, top-tier enterprises in the industry have benefited from capacity integration and technological innovation. This also indicates that future competition in the metal industry will not only be about resource acquisition but also about technological iteration and policy adaptability. At the same time, in response to the global urgent need for environmental protection and sustainable development, the non-ferrous metals industry is gradually focusing on green production, improving resource utilization efficiency through technological innovation and industrial upgrading, and contributing more to the sustainable development of the global economy. Emerging technologies are driving a significant increase in the demand for non-ferrous metals. Currently, the rapid development of green transportation, low-altitude economy, artificial intelligence (AI), and other emerging technologies has greatly boosted the demand for non-ferrous metals. Among them, aluminum, with its lightweight characteristics, has become a core material in the fields of new energy vehicles and ship lightweighting, replacing steel. Meanwhile, with the vigorous development of the photovoltaic industry and the transformation and upgrading of the construction industry, the demand for solar panel mounting brackets and construction aluminum extrusions is also rising. According to Guolian Securities, the growth rate of aluminum supply is expected to significantly pull back by 2025, and the national supply-demand gap for aluminum is projected to reach 400,000 mt and 470,000 mt in 2025 and 2026, respectively. This supply-demand gap will gradually push up aluminum prices. Copper plays the role of "new oil" in the emerging computing power era. With the continuous surge in AI computing power demand, the demand for high-speed copper cables has also increased significantly, becoming the "neural network" connecting the digital world. Additionally, nickel, as a key element in the energy transition, is increasingly widely used in the power battery sector, with a significant trend towards high nickel content. Institutions predict that by 2030, the proportion of nickel used in batteries will reach 60%. Despite the significant increase in demand for non-ferrous metals, the supply chains of metals like copper and aluminum are also facing numerous challenges. From a macro perspective, the tariff policies of the Trump administration have led to a series of trade barriers, causing related enterprises to face additional tariffs or fees and increasing market uncertainty. Additionally, geopolitical conflicts, increasingly stringent environmental regulations, and labor issues are also challenges that cannot be ignored, as these factors may cause delays or interruptions in the mining and smelting processes. CITIC Securities research reports mention that in the context of global trade conflicts, the role of policies is becoming increasingly important. With the introduction of a series of tariff policies in the US, such as the cancellation of export tax rebates for aluminum semis, it is expected to promote deep-seated changes in the domestic industry and optimize the capacity of the copper and aluminum processing industries. However, it is worth noting that tariff policies have not changed the global supply-demand relationship but have only increased the cost of entering the US market. Therefore, enterprises need to closely monitor changes in tariff policies and take corresponding measures based on actual conditions. Taking steel and aluminum as examples, the Trump administration has already imposed tariffs on steel and aluminum products from countries like China. However, since China's steel exports have significantly decreased, the impact on China is relatively small. For the aluminum industry, although the US is one of Canada's major export markets, Canada's aluminum capacity has also been affected by tariff policies. However, since US demand has not decreased, enterprises need to find new suppliers or adjust product structures to cope with changes in tariff policies. The way for miners to break through the cycle. With the deepening of global economic integration, many Chinese publicly listed mining firms have actively disclosed their overseas business situations, particularly showing strong momentum in overseas mining acquisitions. However, in the process of globalization, these enterprises face numerous risks and challenges. Political risk is the primary consideration for overseas mining investments. Since mineral resources are mostly concentrated in politically unstable underdeveloped regions such as Central Asia, Africa, and South America, this brings significant uncertainty to mining investments. Additionally, geopolitical risks cannot be ignored. For example, when Chinese enterprises control mineral resources in South America or other regions through Canada, they may be forced to withdraw due to geopolitical changes, resulting in the loss of previously invested resources. The cyclical nature of mining development is also an important factor that enterprises must face. During the growth phase of mining, enterprises can seize market opportunities and achieve substantial profits by buying low and selling high; but if the market is at a high point, a downturn may come at any time, and enterprises need to have strong risk resistance to cope with market fluctuations. The risks inherent in the metal market itself also cannot be ignored, mainly including market risk and price risk. Market risk stems from the uncertainty of demand, and enterprises may face a situation of overcapacity and insufficient market demand; price risk is closely related to the volatility of metal prices, as metal prices are influenced by various factors such as the futures market, and daily price fluctuations can pose significant challenges to enterprises. To effectively cope with these risks, mining enterprises need to adopt a series of strategies. In terms of price risk management, enterprises can fully utilize tools like the futures market for hedging and locking in future sales prices, thereby reducing the impact of price fluctuations on business operations. Meanwhile, in financial management, mining enterprises need to maintain financial stability and ensure diversified financing channels. During price decline cycles, enterprises' cash flow may be severely impacted, so maintaining sufficient liquidity is crucial. Large mining enterprises usually reserve committed bank credit lines to cope with cyclical changes and ensure access to funds at critical moments. Additionally, when dealing with price decline cycles, mining enterprises tend to broaden financing channels rather than supplementing income by diversifying business sectors like other industries. Because the core business of mining enterprises is directly related to metal prices, during price declines, other business sectors often cannot compensate for the losses of the core business. Therefore, mining enterprises need to flexibly adjust strategies according to their characteristics to navigate cycles and achieve sustainable development. Financial institutions assist mining enterprises in sustainable development. In the development of the aluminum industry, the funding gap has always been a key factor constraining industry development. Facing this challenge, close cooperation among the government, industry, and financial institutions is particularly important. As the largest bank in Singapore and Southeast Asia, DBS Bank has accumulated rich experience in the metals and mining sector and provides comprehensive financial services to related enterprises with its full range of financial products. Specifically, DBS Bank's financial services cover areas such as listing, bond issuance, project financing, trade financing, foreign exchange, and commodity futures hedging, forming a comprehensive service system. In the aluminum sector, DBS Bank has provided professional financial advisory and project financing services for several important projects. For example, the first alumina project invested by Chinese enterprises in Indonesia and the first HPAL nickel smelting project jointly invested by Chinese enterprises and Indonesian partners have both benefited from DBS Bank's deep expertise and rich experience in this industry segment. Notably, the first high-pressure acid leaching (HPAL) smelter jointly established by Chinese enterprises in Indonesia—PT Halmahera Persada Lygend. DBS Bank launched a $625 million syndicated project financing for this project. As the lead arranger of the syndicate, DBS Bank participated in the project early on, designing a feasible financing structure to appropriately address the challenges of the project development phase and the risks of benchmark price fluctuations—both inherent characteristics of smelting projects. This syndicated financing not only helped the project as the world's first successful and scaled HPAL project to land, injecting strong momentum into Indonesia's nickel industry, but also provided guarantees for Chinese enterprises to "go global" and master key strategic resources. Additionally, DBS Bank plays a pivotal role in promoting investment cooperation in non-ferrous metals between China and ASEAN countries. China and ASEAN are not only important investment partners but also close trading partners. As Asia's financial center and trade hub, Singapore can effectively provide multifaceted support and services for Chinese enterprises investing in Southeast Asia's metals and mining sectors. Leveraging its headquarters advantage in Singapore and extensive business network in Southeast Asia, DBS Bank continues to provide comprehensive financial services to meet the diversified needs of clients in the metals and mining sectors, further deepening cooperation and exchanges between China and ASEAN countries in the field of non-ferrous metals. Looking ahead, DBS Bank will continue to leverage its professional advantages to provide customized financial service solutions for mining enterprises, helping them navigate cycles and achieve sustainable development. Zhang Yongming, Managing Director and Global Head of Metals and Mining at DBS Bank.