From "Cycles" to "Structure": The Logic of Value Reassessment for Tianxiang Non-Ferrous Metal ETF's Underlying Assets

Under the drive of a new round of technological revolution and energy transition, the pricing logic of non-ferrous metals is undergoing a profound transformation from “cyclical commodities” to “strategic resource commodities.” The China Securities Industrial Non-Ferrous Metal Theme Index (H11059), tracked by the Tianhong Non-Ferrous Metal ETF (159157), focuses on 30 leading companies in the fields of copper, aluminum, rare earths, tungsten, molybdenum, and other industrial metals, accurately reflecting this value revaluation process. This article analyzes the internal logic of this structural change from three dimensions: the migration of valuation anchors, the irreplaceability of strategic metals, and the industry positioning of the index.

1. Migration of Valuation Anchors: From PE/PB Cyclical Fluctuations to “Resource Reserves Discounting + Strategic Premium”

Under traditional frameworks, the valuation of non-ferrous metal stocks has long been trapped in a “cyclical trap”—profits fluctuate sharply with commodity prices. PE ratios appear low at economic peaks and are passively driven higher during downturns. Investors gamble on turning points in prices and inventory cycles. However, this model is being irreversibly disrupted by supply rigidity.

Structural changes on the supply side are the underlying drivers of valuation reconstruction. The global mining industry’s cost curve is experiencing a permanent upward shift: on one hand, the standards for green mining convert ESG soft constraints into hard entry barriers, significantly raising the return thresholds for new mine investments; on the other hand, high-grade deposits are increasingly depleted, causing a systemic rise in the industry’s average total costs. Meanwhile, carbon neutrality policies set rigid caps on capacity expansion. The Ministry of Industry and Information Technology has explicitly lowered the annual growth targets for the production of 10 major non-ferrous metals from 5% to 1.5% for 2025-2026, indicating that supply curves for base metals like copper and aluminum are shifting from “elastic” to “rigid.”

As supply enters a “slow variable” era, market valuation logic for resource companies begins to reshape. According to disclosures from the Shanghai Silver Fund, when copper companies can maintain high ROE levels over the medium to long term, their PB valuations naturally rise—currently, domestic copper companies are valued at 2–3 times PB, while overseas leaders reach 7–8 times, reflecting a market re-pricing of resource value. Investment horizons are also extending, shifting from short-term speculation on monthly fluctuations to long-term growth accompanying corporate development. This means valuation anchors are shifting from traditional spot earnings discounting to a dual system of “resource reserves discounting + strategic scarcity premiums.” Leading companies with high-quality mineral resources and cost barriers will see their profit centers less influenced by commodity price swings and more driven by long-term resource scarcity premiums.

2. Reflection of Industry Upgrading: The Irreplaceability of Strategic Metals and the Rise of Valuation Centers

If the valuation restructuring of copper and aluminum stems from supply rigidity, then the value leap of strategic metals like rare earths, tungsten, and molybdenum is directly rooted in their irreplaceability in national defense, military, and high-end manufacturing.

This year, the government work report explicitly emphasizes building emerging pillar industries such as integrated circuits, aerospace, and low-altitude economy. These industries are core application scenarios for metals like rare earths, tungsten, molybdenum, and tin. Strategic small metals like tungsten, molybdenum, antimony, and indium, though small in market volume, are critical in technological R&D, becoming indispensable materials in high-end manufacturing, military, and semiconductor fields, characterized by highly concentrated supply and large price elasticity.

Driven by these emerging industries, the differentiation of category values is prompting the entire industry to seek new growth points. Wanguo Securities states that with the continued development of AI and new energy industries, the importance of strategic metals such as copper, lithium, and rare earths will further increase, promoting the mining industry toward high-end and green transformation. For leading enterprises controlling core resources, their role has evolved from “primary raw material suppliers” to “providers of foundational materials for technological infrastructure.” This shift objectively prompts the market to reevaluate their valuation anchors.

3. Industry Positioning of the Index: H11059 as an Upstream Expression of “New Quality Productivity”

The compilation logic of the China Securities Industrial Non-Ferrous Metal Index (H11059) aligns closely with the above-mentioned industry narrative of value revaluation. Unlike other indices covering all categories of non-ferrous metals, H11059 explicitly excludes precious metals like gold and silver, removing their financial attributes influenced by USD tides and risk aversion sentiment. It precisely targets 30 listed companies in the fields of copper, aluminum, lead-zinc, rare earths, tungsten, molybdenum, and titanium—focusing intensely on the industrial metal sector. This extreme industry focus makes its mathematical model more akin to a pure reflection of the “industrial real economy.”

A detailed look at H11059’s top holdings shows that the top ten components include Zijin Mining, China Aluminum, Luoyang Molybdenum, Northern Rare Earth, and other global resource giants, accounting for nearly 55%. This high concentration means the index’s performance is highly linked to the resource acquisition scale and cost control capabilities of leading companies worldwide, rather than downstream processing or light-asset segments. As the strategic importance of rare earths continues to strengthen and supply-demand dynamics tighten due to supply rigidity and demand upgrades for copper, the profit elasticity and valuation potential of these components are expected to expand in tandem.

The Tianhong Non-Ferrous Metal ETF (159157), by passively holding these weighted stocks, constructs a logically rigorous resource upstream portfolio. In the macro window of “cyclical lows + industrial transformation + strategic revaluation,” the advantage of simple cyclical trading tools diminishes, and the standardized vehicle for capturing the upstream resource premiums of “new quality productivity” becomes increasingly accessible to the public.