3Q26 Outlook: Equity Implications: Traditional Materials

Research evidence excerpt

3Q26 Outlook: Equity Implications: Traditional Materials

Idea

July 9, 2026 08:01 AM GMT

Morgan Stanley Asia Limited+MChina Materials | Asia Pacific Rachel L Zhang

Equity Analyst

3Q26 Outlook: Equity Rachel.Zhang@morganstanley.comHannah Yang, CFA +852 2239-1520

Hannah.Yang1@morganstanley.com +852 2239-7079

Implications: Traditional Chris Jiang

Chris.Jiang@morganstanley.com +852 3963-1593

Materials Cynthia Tang

Research Associate

Cynthia.Tang@morganstanley.com +852 3963-4360

We prefer copper, coal and paper, and are turning more cautious

on aluminum.

Copper – top picks: Copper stocks in China have corrected heavily (down 31–37%

from January peaks, despite metal prices at historical highs), and look very attractive

vs. global peers. In contrast, global copper stocks have also sold off but by a Greater China Cement

considerably smaller margin. We would buy on the dip here as copper fundamentals Asia Pacific

Industry View In-Line

remain strong: we see a supply-side slow resumption on the mining side, together

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with tightness in scrap copper and low inventory outside the US, while the demand

China Materials: 3Q26 Outlook: Time To Bottom

side remains well supported by the power infrastructure build-up globally.

Fish?

Aluminum – wave of new supply coming, but largely priced in: With 3.5mnt of China Materials: 3Q26 Outlook: Equity

aluminum capacity impacted by the Middle Eastern conflict, 2026 is still in deficit. Implications: Building Materials

But for 2027, a supply wave is coming as high profit levels lead to one-year payback China Materials: 3Q26 Outlook: Equity

periods on new projects. With Middle East capacity likely to restart in the next 6-12 Implications: New Materials

months, together with 2.1mnt of new capacity and other restarts globally, our global