CITIC Construction Investment | Gold prices experience a phased recovery, electrolytic aluminum supply disruptions intensify

Text | Wang Jiechao, Qin Jing, Shao Sancai

After the EGA-owned Tawiella smelter was attacked by Iranian missiles and drones last weekend, it has been forced to cease operations due to “out-of-control shutdown” of smelting equipment, with a 2025 output of 1.6 million tons. Preliminary assessments indicate that fully restoring electrolytic aluminum production may take up to 12 months. In the US-Iran conflict, aluminum supply losses are masked by current panic sentiment and can serve as an aggressive commodity. Brent crude oil prices remain above $100, and the market continues to interpret concerns of “stagnant growth” or “recession.” In these scenarios, gold performs relatively well and can be prioritized for allocation.

Industrial metals: This week, LME copper, aluminum, lead, zinc, and tin prices changed by 1.8%, 5.6%, 1.6%, 5.1%, and 0.6%; industrial metal prices are jointly determined by “financial attributes” and “commodity attributes.” From a financial perspective, the Federal Reserve has begun a rate-cutting cycle; from a commodity perspective, global copper and aluminum inventories are at relatively low levels. China’s economic recovery is expected, and combined with the boost from the new energy industry, demand for copper and aluminum will improve.

(1) Gold: Gold prices experience a phased recovery. This week, Powell’s statements signaled a dovish stance, clearly characterizing oil price shocks as temporary, and the market is re- betting on rate cuts. Precious metal prices have seen a phased rebound. Considering that gold can still generate good returns in scenarios of stagnation and recession, it is the first to stabilize and rebound after liquidity shocks. In the medium to long term, under the background of the Federal Reserve’s rate-cutting cycle, weakening dollar credit, and challenges to the global division and cooperation model, gold remains a high-quality asset backed by sovereign credit.

(2) Copper: 95k yuan/ton copper price again stimulates significant inventory depletion. Copper prices near 95,000 yuan/ton continue to boost downstream restocking enthusiasm. Domestic spot inventories last week decreased by about 100k tons, and another 60k tons this week, which is rare and highlights downstream inventory exhaustion and high purchasing capacity. Short-term market sentiment remains highly volatile, and the negative price spread between COMEX and LME, along with high copper prices and the Chinese Spring Festival, keeps non-US inventories at new highs. Without supply disruptions, short-term copper prices are unlikely to make big moves. As a resource commodity, the logic of limited supply remains unchanged. The oil crisis reemerges, and new energy is expected to accelerate the replacement of fossil fuels, generating more demand than expected. Additionally, most equity assets have fallen into value investment territory, and allocation can be considered.

(3) Aluminum: Supply disruptions are increasing, and the market is underpricing this. Last weekend, the Tawiella smelter of Emirates Global Aluminium (EGA), the largest aluminum producer in the Middle East, was attacked by Iranian missiles and drones, leading to “out-of-control shutdown” of smelting equipment and forced suspension of operations. Its 2025 capacity is 1.6 million tons. On April 3, it stated: “To restart electrolytic aluminum production, infrastructure must be repaired first, and each electrolysis cell gradually restored. Preliminary estimates show that full recovery may take up to 12 months.” Previously, Qatar Energy reduced 40% of its 660k-ton capacity by 40% due to power supply issues, cutting 264,000 tons; Bahrain Aluminum reduced about 20% of its 1.6 million-ton capacity, cutting 300k tons due to alumina issues. Moreover, the capacity attacked in Bahrain has not been disclosed, and Middle Eastern supply, accounting for 9% of global electrolytic aluminum, is at risk. However, the 2.89% (2.17 million tons) capacity reduction already implemented has not been fully priced in by the market, which worries about recession; considering that consumption shrank in recessions in 2019 (-2.3%) and 2020 (-1.9%), much less than the threat to supply (-9%), electrolytic aluminum can be used as an offensive commodity.

1. The global economy is experiencing a significant recession, with consumption collapsing. The World Bank’s latest “Global Economic Outlook” lowered the 2025 global growth forecast from 2.7% in January to 2.3%, with nearly 70% of economies seeing downward revisions. The World Bank states that global economic growth is slowing due to trade barriers and uncertain global policy environments. Compared to six months ago, when a “soft landing” seemed possible, the current global economy is again plunging into turbulence. If the trajectory is not corrected quickly, living standards could be severely impacted. Global economic data is already showing downward trends, and a deep recession would have a huge impact on non-ferrous metal consumption.

2. US inflation is out of control, and the Federal Reserve’s monetary tightening exceeds expectations, with a strong dollar suppressing equity asset prices. The US cannot effectively control inflation and continues to raise interest rates. The Fed has implemented large, consecutive rate hikes, but services—especially rent and wages—remain sticky, constraining inflation decline. If the Fed maintains high-intensity rate hikes, it will be unfavorable for dollar-denominated non-ferrous metals.

3. Domestic new energy sector consumption growth is below expectations, and real estate sector consumption remains sluggish. Although policies for real estate sales have been relaxed to some extent, residents’ willingness to purchase remains insufficient, and the resolution of debt risks for real estate companies is slow. If sales do not improve, there is a risk of stalled construction in the future, which would negatively impact consumption of some domestic non-ferrous metals.

Wang Jiechao: Chief analyst of new metal materials, master’s degree from Central South University, senior engineer, first-class constructor, consultant, former chief editor of GB/T18916.31, holder of multiple patents including “A method for producing nickel-iron water from laterite nickel ore,” expert in metal new materials and building materials industries, listed as one of New Fortune’s Best Analysts, Sina Finance’s Golden Kylin Best Steel & Nonferrous Analyst, Wind Gold Medal Analyst, second place in Crystal Ball Steel Industry, Best Industry Analyst by Shanghai Securities News, etc.

Qin Jing: Metal and new material research analyst at CITIC Construction Investment Securities, first-class constructor, with ten years of non-ferrous futures research, two years of major asset allocation commodity strategy analysis. Former head of non-ferrous research at a leading domestic futures firm, provided risk management guidance to multiple listed companies, skilled in supply-demand and macro integration, balancing sell-side systematic research and buy-side strategic planning, uncovering industry investment opportunities, awarded “Best Industry Analyst” by Shanghai Futures Exchange.

Shao Sancai: Industry analyst in metals and new materials, Bachelor’s/Master’s in Investment from Shanghai University of Finance and Economics, joined CITIC Construction Investment Securities in 2022, listed in the New Fortune team in 2023/2024, listed in the Golden Kylin team in 2023/2024, part of the Best Analyst team of Shanghai Securities News in 2023/2024, listed in Crystal Ball team in 2024, “Gold Medal Analyst” team member in Wind for 2023/2024, and 21st Century Gold Medal Analyst team member in 2024.

Securities research report title: “Gold Prices Experience a Phase of Recovery, Electrolytic Aluminum Supply Disruptions Intensify”

Release date: April 6, 2026

Publishing organization: CITIC Construction Investment Securities Co., Ltd.

Report analysts:

Wang Jiechao SAC ID: S1440521110005

Qin Jing SAC ID: S1440524080002

SFC ID: BWC080

Shao Sancai SAC ID: S1440524070004

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