The memory chip "super cycle" is transmitted to the upstream, and the non-ferrous metal sector faces structural re-rating
The latest research report from Wall Street investment bank Morgan Stanley predicts that the supply shortage of memory chips for AI data centers will intensify, memory chip prices may increase by 25% month-on-month in the third quarter, and the industry "super cycle" is expected to continue until 2028. Affected by this, the U.S. semiconductor sector rose sharply on Tuesday, with SanDisk rising by more than 14%, and storage leaders such as Western Digital, Micron Technology, and Seagate Technology all rising by more than 11%. Market sentiment is transmitted further upstream. The pricing logic of nonferrous metals such as copper, tin, and industrial silicon that are closely related to chip manufacturing is gradually being reshaped by this round of AI-driven demand.
The latest research report from Wall Street investment bank Morgan Stanley predicts that the supply shortage of memory chips for AI data centers will intensify, memory chip prices may increase by 25% month-on-month in the third quarter, and the industry "super cycle" is expected to continue until 2028. Affected by this, the U.S. semiconductor sector rose sharply on Tuesday, with SanDisk rising by more than 14%, and storage leaders such as Western Digital, Micron Technology, and Seagate Technology all rising by more than 11%. Market sentiment is transmitted further upstream. The pricing logic of nonferrous metals such as copper, tin, and industrial silicon that are closely related to chip manufacturing is gradually being reshaped by this round of AI-driven demand. In the past six months, the trends among different metal varieties have clearly diverged. Morgan Stanley emphasized in the research report that memory chips are becoming one of the key bottlenecks in building AI computing power. Based on this, if downstream storage manufacturers accelerate production expansion to meet demand, upstream raw material consumption will increase accordingly. "In this round of semiconductor super cycle, technology giants continue to invest heavily in hardware such as data centers and AI servers. Non-ferrous metals such as copper, tin, and industrial silicon play different roles in them. The power supply and distribution system of the data center requires a large amount of copper, and the PCB board welding and chip manufacturing in the AI server are inseparable from tin and silicon wafers. The extension of the 'super cycle' to 2028 means more demand for these non-ferrous metals." said Wang Yanhong, head of Zhengxin Futures Research Institute. From the futures market, as of the close of July 22, the main domestic Shanghai copper 2609 contract was quoted at 105,820 yuan/ton, and the main Shanghai tin 2608 contract was quoted at 417,190 yuan/ton, both at relatively high levels during the year. The A-share non-ferrous metal ETF has risen by more than 8% this week, showing that some funds are being allocated along the chain of "AI computing power-storage chips-upstream metals". In Wang Yanhong's view, the market may not have fully priced in this expectation. She explained that demand variables are slow variables in the pricing of non-ferrous metals. The proportion of usage in the semiconductor field to the total demand for these non-ferrous metals is still relatively low. Although the growth rate is fast, the impact on the balance sheet may not be obvious. This slow change needs to accumulate for a period of time before it is easily priced by the market. "Currently, the global economy is facing an important transformation. Emerging industries represented by artificial intelligence may become a new driving force for economic growth. Therefore, the demand for non-ferrous metals from upstream and downstream industries will grow rapidly, and the market is beginning to pay more and more attention to the pricing impact of emerging industry demand on non-ferrous metals. Considering that most emerging industries are currently in a rapid development stage, the final scale of development is difficult to estimate, and the increase in demand for related non-ferrous metals is difficult to completely accurately quantify, so there will be certain fluctuations in price transmission." said Liu Peiyang, a non-ferrous metals analyst at Centaline Futures. In fact, since the outbreak of this round of chip demand, significant structural differentiation has occurred within the nonferrous metal sector. According to Liu Peiyang, the trend of the nonferrous metal sector this year is mainly divided into four stages: in January, the prices of most metals rushed to the high point of the year, and some varieties even reached their own historical highs; from February to March, the prices of most metals fell from the high level, even close to the low point of the beginning of the year; from the end of March to the end of May, the prices of most metals re-entered a round of rising prices; since the beginning of June, the prices of most metals have fallen into a weak adjustment. "Among them, the performance of tin has relatively exceeded expectations. The correlation between tin futures prices and the semiconductor index in the equity market is also higher. This is mainly because compared with other non-ferrous varieties, tin's demand in the semiconductor field accounts for a significantly higher proportion. The performance of industrial silicon is not as good as expected because there is significant excess pressure in fundamentals." Wang Yanhong said. However, Wang Yanhong believes that since the outbreak of this round of chip tides, the upward trajectory of non-ferrous metal valuations has mainly benefited from the three driving factors of raw material constraints, the Federal Reserve's interest rate cut cycle, and the semiconductor super cycle. Since the proportion of total demand is still low, the impact of the chip tide on non-ferrous metal valuations seems to be weaker than the first two drivers. Looking forward to the second half of this year to 2027, the driving effect of the memory chip "super cycle" on non-ferrous metals is expected to continue, but the prospects of each variety will continue to be differentiated.
"Looking at the market outlook, non-ferrous metal prices will continue to fluctuate at high levels." Wang Yanhong said that although non-ferrous metal prices have been at a historically high level and mining companies have huge profits, the difficulties in upstream mineral supply expansion due to long development cycles, declining grades, and geographical factors in major producing countries are the main support for non-ferrous metal prices to remain high. In addition, the semiconductor boom cycle is a variable that cannot be ignored on the demand side. As the proportion of demand in total demand gradually increases, its impact on the valuation logic of non-ferrous metals will increase. However, during this period, the Federal Reserve policy and geopolitical factors in the Middle East are also expected to continue to disrupt the short- and medium-term trading rhythm. Liu Peiyang believes that overall, for nonferrous metals, macro pricing is still the core factor. Before the risk of the Federal Reserve raising interest rates is fully realized, the nonferrous metals market as a whole will be under certain pressure. Once crude oil prices fall back to lows in the future and the Federal Reserve's policy becomes looser again, non-ferrous metal prices are expected to be strong under the support of supply and demand fundamentals.
"Looking at the market outlook, non-ferrous metal prices will continue to fluctuate at high levels." Wang Yanhong said that although non-ferrous metal prices have been at a historically high level and mining companies have huge profits, the difficulties in upstream mineral supply expansion due to long development cycles, declining grades, and geographical factors in major producing countries are the main support for non-ferrous metal prices to remain high. In addition, the semiconductor boom cycle is a variable that cannot be ignored on the demand side. As the proportion of demand in total demand gradually increases, its impact on the valuation logic of non-ferrous metals will increase. However, during this period, the Federal Reserve policy and geopolitical factors in the Middle East are also expected to continue to disrupt the short- and medium-term trading rhythm. Liu Peiyang believes that overall, for nonferrous metals, macro pricing is still the core factor. Before the risk of the Federal Reserve raising interest rates is fully realized, the nonferrous metals market as a whole will be under certain pressure. Once crude oil prices fall back to lows in the future and the Federal Reserve's policy becomes looser again, non-ferrous metal prices are expected to be strong under the support of supply and demand fundamentals.