Geopolitical Conflicts Disrupt Global Supply Chains, Value of Affluent Nations' Resource Selection Strategies Becomes Prominent

How Middle East Conflicts Are Reshaping the Investment Logic of Non-Ferrous Metals

Recently, the ongoing escalation of Middle East conflicts has rapidly transmitted geopolitical risks to the global commodities market. International oil and gold prices have risen together. As core materials in modern industry, non-ferrous metals are experiencing a restructuring of their price trends and industry logic. Compared to the obvious volatility of oil, non-ferrous metals—with their risk-hedging, industrial, and strategic attributes—may become an overlooked “hidden trump card” in this geopolitical conflict. As a resource-themed fund, the GuoFeng Resources Select Hybrid Fund (Class A 021642, Class C 022167) highlights long-term allocation value.

From the industry classification perspective, non-ferrous metals refer to metals other than ferrous metals (iron, manganese, chromium). Based on properties and uses, they can be divided into four main categories, forming the core framework for industry research and investment:

1. Precious Metals: Represented by gold, silver, platinum, and palladium. Gold and silver have strong risk-hedging and inflation-resistant properties, making them key assets during geopolitical turmoil. Platinum and palladium are essential for automotive exhaust purification.

2. Industrial Metals: Mainly copper and aluminum. Copper is called the “mother of industry,” and aluminum is the “king of lightweight.” They are directly linked to infrastructure, real estate, and other real economy sectors, serving as important macroeconomic indicators.

3. Energy Metals: Including lithium, cobalt, and nickel. These are core raw materials for new energy industries, widely used in electric vehicles, photovoltaics, and energy storage.

4. Minor Metals: Cover tungsten, antimony, germanium, rare earths, and other strategic scarce resources. Although used in limited quantities, they are irreplaceable in military, chip manufacturing, and high-end equipment, with significant strategic value.

The short-term impact of Middle East geopolitical conflicts on the non-ferrous metals industry mainly transmits through three channels: risk sentiment, shipping disruptions, and energy costs. Performance varies significantly among different varieties.

Beyond the short-term fluctuations driven by geopolitical situations, the long-term investment logic of the non-ferrous metals industry has shifted from purely cyclical to a “cycle + growth” dual-driven model. Three core trends support long-term value:

1. Increased demand driven by green transformation: The new energy sector has become a major consumer of non-ferrous metals. For example, a single electric vehicle uses 3-4 times more copper than a traditional fuel vehicle. Photovoltaic power stations have high aluminum frame demand, and lithium batteries rely heavily on lithium, cobalt, and nickel. The energy transition under carbon neutrality will sustain decades of demand growth.

2. Rigid supply constraints: Mining exploration to production takes 5-10 years. Over the past decade, global mining investments have been insufficient, leading to scarcity of quality resources. Coupled with tightening policies and export controls in resource-rich countries, supply cannot quickly meet rising demand, pushing industry price levels upward in the long term.

3. Dual support from monetary and geopolitical environments: The global de-dollarization process accelerates, with central banks increasing holdings of physical assets like gold. Geopolitical conflicts have become normalized. Non-ferrous metals, as tangible assets that hedge inflation and risks, have long-term allocation value.

For ordinary investors, capturing opportunities in the non-ferrous metals sector requires balancing professionalism and risk control. Direct participation in stocks or futures markets demands high expertise. Investing via resource-themed funds offers a more convenient approach. As a pure resource-themed fund, GuoFeng Resources Select invests over 80% of its non-cash assets in stocks and depositary receipts related to resource themes. Its holdings include base metals like copper, aluminum, zinc, precious metals like gold, and rare metals such as lithium and cobalt, as well as other resource sectors like oil. The current investment logic focuses on resource rotation within the supply-demand framework, especially emphasizing energy metals like lithium. Since copper, gold, and aluminum have already experienced significant gains, their continued upward momentum remains uncertain. Conversely, the supply-demand dynamics for lithium are expected to reverse, with greater price elasticity. By 2025, tight supply-demand relations are projected to drive non-ferrous metal prices to the top of the industry. Looking ahead to 2026, the supply-demand balance is unlikely to change significantly, likely continuing to push resource prices higher. Therefore, current resource allocation is probably a good choice. However, divergence among varieties may intensify, so it’s important to optimize the allocation ratios based on supply-demand patterns. For example, with severe power shortages overseas, demand for energy storage and power batteries is expected to remain high, supporting lithium demand and potentially boosting lithium mining stocks. Morgan Stanley forecasts a global lithium market gap of 80,000 tons in 2026, indicating a broad market space.

Overall, the US-Iran conflict provides a short-term emotional boost to the non-ferrous metals sector. Precious metals, aluminum, and strategic minor metals are benefiting phase-wise. Meanwhile, the long-term industry direction is determined by three core factors: green transformation, supply rigidity, and monetary and geopolitical support. Investors should monitor short-term opportunities driven by geopolitical developments while maintaining a long-term perspective and using professional tools to seize structural industry opportunities.