Market Outlook for 2026: BofA Securities predicts that the "Year of the Fire Horse" will favor electrification and AI power infrastructure in the Chinese basic metals market, with a focus on aluminum, gold, copper, lithium, and cobalt stocks.

Stock Recommendations: The broker recommends buying aluminum stocks and has a positive outlook on gold, copper, lithium, and cobalt, while being neutral on coal and bearish on solar energy and building materials due to weak demand and declining profit margins.

Top Stock Picks: Key stock picks include CHALCO, ZIJIN MINING, CHINAHONGQIAO, SD GOLD, and GANFENGLITHIUM, with varying short selling ratios indicating market sentiment.

Underperforming Stocks: Notable underperformers include TONGWEI, XINYI SOLAR, ANGANG STEEL, and CR BLDG MAT TEC, which are facing significant short selling pressures.

Stock Ratings Overview: Several companies in the mining and energy sectors received updated ratings, with ZIJIN MINING and CMOC rated as "Overweight," while JIANGXI COPPER was upgraded from "Underweight" to "Neutral."

Short Selling Activity: Notable short selling activity was reported for various stocks, including ZIJIN MINING and CHINAHONGQIAO, with short selling ratios indicating significant market interest.

Price Target Adjustments: Price targets for ZIJIN MINING and CMOC were raised, reflecting positive market sentiment, while JIANGXI COPPER's target was also increased, indicating a shift in investor outlook.

Market Performance: The overall market performance showed mixed results, with some stocks like GANFENG LITHIUM and TIANQI LITHIUM experiencing gains, while others like CHALCO and YANKUANG ENERGY faced declines.

JP Morgan's Sector Preference: JP Morgan ranks the basic materials sector for 2026 as Copper/Gold > Aluminum > Lithium > Coal > Steel, anticipating continued outperformance of MSCI China Materials over MSCI China due to supply disruptions and M&As.

JIANGXI COPPER Rating Upgrade: The rating for JIANGXI COPPER was upgraded to Neutral based on a positive outlook for copper, while Chinese policies are seen as key drivers of commodity prices, with milder-than-expected implementation of the "anti-involution" policy.

Steel Sector Challenges: Due to ongoing efforts to reduce excess capacity, steel profit margins are expected to remain low, leading to downgrades for BAO IRON to Neutral and ANGANG STEEL to Underweight.

Morgan Stanley's Top Picks: ZIJIN MINING is highlighted as Morgan Stanley's top pick for the year, with continued favor for CMOC, CHALCO, and CHINAHONGQIAO amidst significant short selling activity in these stocks.

China's Steel Industry Outlook: Goldman Sachs predicts a prolonged profit slump for Mainland steel mills due to slower capacity reduction and high steel exports, leading to moderate price improvements.

Earnings Forecast Adjustments: The firm has lowered earnings forecasts for BAO IRON and MAANSHAN IRON, while also anticipating deeper losses for ANGANG STEEL over the next two years.

Short Selling Activity: There is notable short selling activity in the steel sector, with significant amounts reported for BAO IRON, MAANSHAN IRON, and ANGANG STEEL.

Long-term Capacity Goals: Despite current challenges in meeting ultra-low emission standards, Goldman Sachs maintains that the long-term goal of reducing capacity in the steel industry remains achievable.

Goldman Sachs Commodity Report: Goldman Sachs predicts that China's commodity demand will stabilize in 2023, with growth rates between -1.3% and 2%, and a gradual recovery expected from the second half of 2025.

Market Dynamics: The report highlights stable supply-demand fundamentals and a favorable macro environment, but future price directions will depend on supply outlook changes influenced by themes like supply discipline, anti-involution, and mergers and acquisitions.

Commodity Outlook: The firm is optimistic about cement and coal, cautious about steel and aluminum, and maintains a positive outlook on copper and gold, while being cautious regarding lithium and paper packaging.

Stock Ratings: Various stocks in the commodities sector have been rated with adjustments, including downgrades for some steel companies and upgrades for coal and cement firms, reflecting the shifting market sentiments.