At the beginning of 2026, the prices of gold and silver skyrocketed, driving a comprehensive uptrend in non-ferrous metals.

Among them, the performance of copper prices exceeded market expectations. After achieving a 34.34% increase in 2025, they continued to rise at the beginning of 2026.

However, what is rarely mentioned is that the soaring prices of non-ferrous metals will eventually be transmitted to downstream manufacturing industries, and in almost all sectors of manufacturing, it is Chinese enterprises that are doing the work.

For example, for manufacturing enterprises that are highly dependent on copper, such as home appliances, new energy vehicles, and electronic manufacturing, the escalating copper price means that their already meager profits will be further squeezed in the near future.

Copper chains are not the only ones affected by price hikes. From lithium carbonate, the core raw material of the new energy industry, to silver, which is essential for photovoltaic production, from tungsten concentrate, the core substrate of cemented carbides, to nickel and cobalt used in battery manufacturing, the prices of various industrial raw materials have soared collectively.

While upstream raw material enterprises are reaping substantial profits through resource monopolies, various hard and soft technology companies are also gaining a significant share in the production and circulation of goods, leveraging their technological and channel advantages.

Only the manufacturing enterprises caught in the middle are caught in a dilemma, enduring the rigid high prices of costs and expenses on one side, while facing relentless price pressure from downstream enterprises on the other. It is no exaggeration to say that China's manufacturing industry is facing an all-chain encirclement.

What is even more regrettable is that, despite the transition to modern and high-end manufacturing, the era of low-quality and low-price products made in China has passed. However, "working the most and earning the least" remains the norm in China's manufacturing industry.

01 Upstream compression

The surge in copper prices is merely a microcosm of the broader trend of rising prices for upstream raw materials.

Since the beginning of 2025, the global non-ferrous metals and industrial raw materials market has ushered in a comprehensive price hike cycle. Major non-ferrous metals such as aluminum, tin, zinc, and lead have seen consecutive price increases, while the prices of various raw materials such as lithium carbonate, tungsten concentrate, and tungsten carbide have doubled.

Data shows that the global tin price has risen by nearly 40% cumulatively in 2025. As we enter the beginning of 2026, the upward trend has intensified further. Zinc and lead, as traditional industrial raw materials, have also seen a notable increase in prices. In 2025, LME zinc futures rose by over 4%, closing at $3,118/ton at the end of the year. LME lead futures rose by about 3%, closing at $2,011/ton.

In addition to non-ferrous metals, the prices of specialty raw materials required in the fields of new energy and high-end manufacturing have seen an astonishing increase. Lithium carbonate, as the core raw material for new energy vehicle batteries and energy storage batteries, has seen its price soar from RMB 75,700 per ton in January 2025 to RMB 175,250 on January 23, 2026, marking a surge of 131.4%.

The price hikes in the tungsten industry chain are even more exaggerated. Affected by factors such as the national control on the total mining volume of tungsten ores and the reduction of high-grade mines, the price of tungsten concentrate has soared to 520,000 yuan/ton. As the core raw material for cutting tools and cemented carbides, the price of tungsten carbide has increased from approximately 300,000 yuan/ton at the beginning of 2025 to 1.2 million yuan/ton in January 2026.

The surge in raw material prices directly fueled explosive growth in the performance of upstream mining enterprises:

The 2025 performance forecast released by Zijin Mining shows that the company expects to achieve a net profit attributable to shareholders of listed companies of RMB 51 billion to RMB 52 billion, representing a year-on-year increase of 59% to 62%. The core benefit comes from the increase in both volume and price of copper, gold, silver, and other mineral products; 、 (Note: The original text appears to be an incomplete or accidental input, and thus cannot be translated into English. If you have any specific text or content you would like me to translate, please provide it.)

Luoyang Molybdenum Industry's net profit attributable to shareholders in 2025 is expected to increase by 47.8% to 53.71% year-on-year, with both companies recording their best performance ever.

The performance of tungsten industry-related enterprises is even more impressive. China Tungsten High-tech's net profit after deducting non-recurring gains and losses surged by 407.52% year-on-year in the first three quarters of 2025, with a quarter-on-quarter increase of over 700% in the third quarter. Xiamen Tungsten achieved a net profit of RMB 2.311 billion in 2025, representing a year-on-year increase of 35.08%. Its three major businesses, tungsten and molybdenum, rare earths, and battery materials, all benefited from rising raw material prices and increased sales. Some tungsten mines achieved profits of RMB 300,000 to RMB 400,000 per ton.

Listed companies related to the tin industry have also experienced a double boom in stock prices and performance. Since the beginning of 2026, the stock prices of Yunnan Tin, Huaxi Nonferrous Metals, and Xingye Silver & Tin have increased by 43.26%, 34.85%, and 47.92% respectively.

In stark contrast to the wealth bonanza of upstream enterprises, downstream manufacturing companies are experiencing unprecedented cost pressures.

The home appliance industry is one of the sectors most impacted by the rise in copper prices, with copper accounting for over 20% of the total cost of air conditioners. On February 4, 2026, the spot copper price was reported at 105,020 yuan/ton, marking a 42.25% increase from the 73,830 yuan/ton price at the beginning of 2025. This implies that the cost of air conditioners has increased by 8.45% solely due to the rise in copper prices.

The new energy and electronics industries are also not immune. In the new energy vehicle industry, aluminum and copper are core raw materials. UBS stated in its latest research report that in terms of metal raw materials alone, the cost inflation per battery electric vehicle (BEV) is as high as RMB 5,600 (with lithium contributing the majority of the increase, with a price rebound of up to 109%).

According to the analysis article published by Cui Dongshu, the gross profit per vehicle in the automotive industry chain in 2025 will only be 13,000 yuan.

For enterprises like those in the new energy vehicle and air conditioning sectors, although they can transfer some costs through price increases, in the context of increasingly fierce industry competition, a fierce price war may still not be enough to retain customers, making it almost impossible to pass on the increased costs through price hikes.

In fact, the "raw material harvesting factory" is only part of the appearance, and the rise in upstream raw material prices is just the beginning of the pressure on manufacturing costs. For Chinese factories, the "dust" of the times is far more than that.

02 Multi-party encirclement and suppression

Agriculture and manufacturing are the source of all commercial activities and the material foundation of the national economy. Only by producing products can we take them as a starting point for subsequent commodity circulation, and in the process of circulation, various industries such as finance, marketing, and technology will be derived.

It can be said that without a solid real economy and a sufficiently profitable manufacturing industry, dependent industries such as finance, technology, and Internet plus will become like water without a source and a tree without roots, unable to sustain development.

After decades of development, China has become the world's largest manufacturing country, possessing a complete industrial system capable of producing a full range of industrial products from low-end to high-end. Especially in high-end manufacturing industries represented by new energy vehicles, photovoltaic energy storage, and electronic products, they have become increasingly mature in the new stage.

Behind this "huge scale", China's manufacturing industry is gradually being constrained by multiple links in the supply and demand chain.

In addition to the pressure from upstream suppliers, there are also cost and expense pressures in various aspects such as finance, marketing, and technological research and development, which collectively form a "encirclement" situation for Chinese factories, further compressing the profit margins of China's manufacturing industry.

These situations are particularly evident in the circulation of goods. The sustained high cost of marketing has become a heavy burden on the manufacturing industry. Especially under the wave of mobile internet marketing, channels are becoming increasingly flat, and traffic is king. As the number of mobile internet users has reached its ceiling and new traffic sources have dried up, enterprises cannot acquire customers through cheap traffic sales.

When platforms turn traffic tilting into a commodity, the marketing expenses of manufacturing enterprises can only rise on a large scale.

In January 2026, Paidai, a self-media outlet in the e-commerce industry, completed the "2025 E-commerce Survival Survey" covering thousands of sellers. The survey results showed that the proportion of paid traffic in sales continued to rise, with over 63% of merchants having a paid traffic investment ratio of more than 10%, and 17.8% of merchants even exceeding 30%, severely squeezing profits.

In addition, high financing costs and increased R&D investment, all of which are ultimately borne by manufacturing enterprises, coupled with price pressure from downstream enterprises and consumers, have led to a decline in profit margins in China's manufacturing industry year by year, with the industry constantly trapped in the dilemma of "increasing production without increasing revenue".

According to data released by the National Bureau of Statistics, although the revenue of China's industrial enterprises above a certain size has continued to rise over the past decade, the profit margin has been declining year by year to 5.32%, with no signs of rebound.

What is more noteworthy is that among all industrial enterprises, the manufacturing industry stands out as the shorter and weaker link that "drags down profitability". In 2025, although manufacturing industrial enterprises achieved a total profit of 5.69157 trillion yuan, representing a year-on-year increase of 5.0%, the profit margin was merely 4.7%.

In 2025, the upstream mining industry experienced a significant decline in both revenue and profit (due to performance lag), yet its profit margin reached as high as 15.9%. Even the profit margin of the electricity, heat, gas, and water production and supply industry was higher than that of the manufacturing industry.

The earnings of various "water sellers" have already surpassed those of "gold diggers".

It is evident that the awkward position of Chinese factories has remained unchanged - they perform the most arduous and tiring tasks, yet can only earn the meagerest profits.

03 Helpless Reality

The upstream and downstream encirclement faced by China's manufacturing industry is essentially a helpless throes as the industry once again faces an upgrade.

In the past, when it came to the low profits made in China, it seemed "natural" that the profits were taken away by high-tech and high value-added foreign products due to the low-end nature of Chinese products. Many people therefore criticized Chinese enterprises for lacking technological content.

Nowadays, after decades of development, China's manufacturing industry has achieved "scale leadership" and even technological leadership in some fields, becoming the world's largest manufacturing country.

However, after the upgrading of the manufacturing industry and years of capacity accumulation, it has entered a stage where manufacturing capacity exceeds market carrying capacity. This inevitably leads to another round of homogenization and intense competition, with the sharp edges of both upstream and downstream industries still intact.

Going through such pains, it is insufficient to merely eliminate outdated production capacity and upgrade productivity again. In addition to cultivating enterprises with stronger core competitiveness, China's manufacturing industry needs more global involvement from political forces in order to truly grasp the dominance of the industrial chain.

The destiny of the manufacturing industry is that the flow of goods can never escape the escort of political and even military forces.

Facing difficulties, many Chinese manufacturing enterprises have begun to actively break the deadlock and seek paths for survival and development. There are roughly three directions:

The first is the expansion of business scope. More Chinese factories have set their sights on the vast world beyond their borders, continuously and vigorously exporting Chinese-made products. Nowadays, exports are no longer just low-end shirts and toys, but high-tech automobiles and ships.

In 2025, China's import and export trade surplus reached $1.19 trillion, making it the only country with a trade surplus exceeding $1 trillion. The sources of the surplus have gradually shifted from primarily low value-added miscellaneous products such as furniture and footwear to high value-added products such as machinery and transportation equipment.

Currently, lithium batteries, solar cells, electric vehicles, wind power equipment, industrial robots, and shipbuilding have emerged as new export products. These goods possess stronger premium pricing capabilities compared to previous low-priced goods.

The second aspect is the extension of the industrial chain. Some manufacturing enterprises have proactively expanded their operations upstream and downstream to reduce their dependence on external factors.

As Tongling Nonferrous stated in response to investors' questions on the interactive platform, the second phase expansion project of its Mirador copper mine was basically completed in May 2025. In the future, it will further reduce its dependence on external copper raw materials and effectively hedge against the pressure of rising copper prices.

In the automotive industry, news has emerged that BYD, Great Wall Motor, and Geely Automobile have all been considering purchasing lithium mines. The aim is to strengthen their industrial chains and reduce their dependence on raw materials for key components.

The third approach is to extend the business in technology. Reducing raw material dependence through technological substitution is also an important attempt for Chinese manufacturing enterprises to break through the dilemma.

For example, the continuous surge in copper prices has prompted many enterprises to accelerate the promotion of "aluminum-replacing-copper" technology. As of December 2025, 19 air conditioning and industrial chain enterprises, including Midea, Gree, and Haier, have joined the "Air Conditioning Aluminum Reinforcement Application Research Working Group" of the China Household Appliances Research Institute. The soaring price of lithium carbonate has also prompted many enterprises to start researching and developing sodium-ion batteries.

In January this year, CATL (Contemporary Amperex Technology) has launched the industry's first commercial sodium-ion battery with light weight.

Regardless of the path of transformation, it is bound to be a long and challenging journey. However, this is the only path for China's manufacturing industry to achieve its "phoenix涅槃". In this process, those enterprises that can withstand cost pressures, are willing to increase R&D investment, and dare to actively expand overseas, have a greater chance of breaking free from the encirclement of upstream and downstream industries.

It is not easy for Chinese enterprises to stand at the core of the global industrial chain and become benchmarks in the manufacturing industry, as the external pressure and difficulties are simply too overwhelming. To truly achieve the goal of "work more and earn more", it requires not only the efforts of individual enterprises, but also the coordinated and comprehensive planning of China's global political, economic, and military systems.