China First Heavy Industries (601106) Limit-Up Analysis: Cyclical Stock Rally Driven by Surging Nickel Prices

China First Heavy Industries (601106) surged to a limit-up on January 8, 2026, closing at RMB 4.92 with a gain of +10.07%, hitting a 52-week high. The core catalyst for the limit-up is the surging nickel price: on the evening of January 6, LME nickel futures recorded the largest single-day gain in over three years, and the Indonesian Nickel Miners Association announced that its 2026 production target would be sharply cut from 379 million tonnes to 250 million tonnes, a reduction of up to 34%[1][2][3]. Market sentiment is upbeat, with a net purchase of RMB 192 million on the Dragon and Tiger List, indicating active institutional capital inflows. However, the company is currently in a loss-making state (EPS -RMB 0.52), and its core business is equipment manufacturing rather than nickel production, providing limited fundamental support. Investors need to be wary of the risk of chasing highs at elevated levels and rationally assess the sustainability of short-term speculative gains.

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On the evening of January 6, 2026, the price of London Metal Exchange (LME) nickel futures experienced extreme volatility, once breaking the US$18,785/tonne mark with a gain of over 10%, hitting the highest level since June 2024 and recording the largest single-day gain in over three years[1][2]. This sharp volatility quickly spread to the domestic futures market: the main contract price of Shanghai Nickel rose from a low of RMB 111,700/tonne on December 17 to RMB 147,500/tonne as of the midday session on January 7, 2026,

[1][2].

The blockbuster news disclosed by the Indonesian Nickel Miners Association (APNI) triggered the rally: its 2026 nickel ore production target is proposed to be sharply cut from 2025’s 379 million tonnes

, a reduction of up to 34%, far exceeding market expectations[1][2][3]. Indonesia’s Minister of Energy and Mineral Resources Bahlil Lahadalia clearly stated that the adjustment aims to “accurately match market demand” and will be precisely regulated through mining quota approval (RKAB)[1]. The International Nickel Study Group (INSG) forecasts global nickel demand of 3.82 million tonnes and production of 4.09 million tonnes in 2026, while institutional calculations show that a 20-30 million tonne production cut by Indonesia could reverse the global nickel supply-demand balance in 2026[3][4]. CICC analysis believes that the probability of the tightened nickel ore quota policy being finally implemented is high[4].

China First Heavy Industries, through cooperation with enterprises such as Jiangsu Delong, participates in the ferronickel projects at the Indonesia Delong Industrial Park, including the Phase I 600,000-tonne-per-annum ferronickel smelting project and the Phase II 3-million-tonne-per-annum integrated ferronickel and stainless steel project. Its products are mainly supplied to the stainless steel sector, so the company indirectly benefits from the improved industry sentiment driven by surging nickel prices[1][2]. It should be noted that China First Heavy Industries is a heavy machinery manufacturer by core business, not a nickel producer. Its actual exposure to nickel business is relatively limited, and the stock price rise more reflects market speculation on nickel price expectations.

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Indicator	Value
Current Price	RMB 4.92 (Limit-Up Price)
Price Change	+10.07%
52-Week Range	RMB 2.45 - RMB 4.92
Range Gain (Dec 15 - Jan 8)	+25.19% (RMB 3.93 → RMB 4.92)
Intra-Period Fluctuation Range	RMB 3.48 - RMB 4.92 (+41.38%)

From a technical perspective, China First Heavy Industries launched a rally in mid-December, with its stock price continuously climbing from around RMB 3.48 to hit the limit-up price of RMB 4.92 on January 8, a 52-week high. The cumulative gain during the period exceeded 25%, with high volatility (daily standard deviation of approximately 5.12%), indicating high capital participation activity.

Indicator	Data	Market Implication
Today’s Trading Volume	96.1 million shares	Lower than the daily average of 143.85 million shares
Turnover Rate	Approximately 2.65%	Relatively low
Net Purchase on Dragon and Tiger List (Jan 7)	RMB 192 million	Active institutional buying, ranked 3rd
Shanghai-Hong Kong Stock Connect Net Purchase	RMB 3.7619 million	Moderate foreign investor participation

Notably, today’s trading volume is significantly lower than the recent average (daily average of approximately 242 million shares), showing a “limit-up on shrinking volume” pattern, indicating limited selling pressure after the limit-up and good chip locking. However, this also means that if sentiment reverses later, there may be greater profit-taking pressure. Dragon and Tiger List data shows obvious net inflow of institutional capital, providing certain support for the short-term rally.

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From the capital perspective, overall market sentiment is upbeat. Dragon and Tiger List data shows that China First Heavy Industries had a net purchase of RMB 192 million on January 7, ranking 3rd among all listed stocks, indicating active buying by institutional investors[1]. The Shanghai Stock Connect channel recorded a net purchase of RMB 3.7619 million, indicating that foreign investors also paid moderate attention to this cyclical stock. The industrial machine tool sector strengthened overall, with China First Heavy Industries achieving 2 consecutive limit-ups, forming a linkage effect with the commercial aerospace concept, and market speculation enthusiasm is high.

82 stocks hit limit-ups in the A-share market today, with overall market sentiment upbeat[5]. From the distribution of limit-up stocks, the machinery and equipment sector had the most limit-ups (20 stocks), reflecting fermenting expectations of manufacturing recovery. The surging nickel price drove the overall strength of the non-ferrous metals sector, with nickel-related concept stocks such as GEM Co., Ltd. hitting limit-ups at one point, forming a good sector linkage effect. Against this backdrop, China First Heavy Industries, as a target with dual attributes of “industrial machine tool + nickel metal concept”, naturally received concentrated pursuit from market capital.

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China First Heavy Industries is one of China’s largest heavy machinery manufacturing enterprises, whose main products include large-scale metallurgical complete sets of equipment, nuclear power equipment, mining equipment, heavy pressure vessels, etc. The company is indirectly involved in the nickel industry chain through its participation in the Indonesia Delong Industrial Park ferronickel project, but its core business remains equipment manufacturing and project services. In terms of financial indicators, the company is currently in a loss-making state, with TTM EPS of -RMB 0.52 and a price-to-book ratio of approximately 1.5 times, close to net asset value.

Indicator	Value	Evaluation
EPS (TTM)	-RMB 0.52	Loss-making state
P/E	-9.46x	Loss-making, no positive P/E
Price-to-Book Ratio	Approximately 1.5x	Close to net asset value

: Despite the sharp rise in nickel prices, LME nickel inventories remain at multi-year highs (approximately 254,000 tonnes), and the Shanghai Futures Exchange nickel inventories are approximately 45,544 tonnes[4]. The global nickel supply and demand is still in a slight surplus state, and the inventory accumulation trend has not been completely reversed, so the sustainability of fundamental improvement remains to be seen.

: There is uncertainty about the final implementation of Indonesia’s large-scale production cut policy, so it is necessary to pay attention to the subsequent actual implementation. If the production cut is less than expected, nickel prices may face correction pressure.

: The company’s fundamentals have not yet improved, its performance is still in a loss-making state, and its stock price has reached a 52-week high. With a large short-term gain, the risk of technical correction is rising. The actual transmission of nickel price increases to performance has time lags and uncertainties, so investors need to be wary of the risk of value regression after concept speculation.

: China First Heavy Industries is not a nickel producer by core business, but an equipment manufacturer and project participant, with limited actual exposure to nickel business. The stock price rise more reflects market sentiment speculation on nickel price expectations, rather than a substantial improvement in the company’s fundamentals.

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Scenario	Probability	Conditions	Trend Forecast
Scenario 1	45%	Nickel prices remain strong + continuous sector speculation	Short-term rally followed by consolidation to digest profit-taking
Scenario 2	35%	Nickel prices pull back from highs + market sentiment cools	Short-term correction, testing support at the 5-day moving average
Scenario 3	20%	Indonesian production cut policy exceeds expectations + performance improvement	Mid-term oscillatory upward trend

Type	Price	Explanation
Resistance Level	RMB 5.00	Psychological pressure at integer level
Resistance Level	RMB 5.42	Historical high (2023)
Support Level	RMB 4.60	Near the 5-day moving average
Strong Support Level	RMB 4.47	Closing price on the day before the limit-up

From a technical indicator perspective, the RSI may enter the overbought zone in the short term, and the MACD has a golden cross with an expanding gap, continuing the bullish pattern. Subsequent focus should be on changes in trading volume: if it can continue to release volume for turnover, the rally is expected to continue; if there is volume expansion with stagnant price or shrinking volume with negative decline, it is necessary to be wary of the formation of a short-term top.

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This limit-up of China First Heavy Industries is mainly driven by the dual factors of

and , belonging to a typical cyclical stock/concept stock speculation rally. Indonesia announced a 34% sharp cut in nickel production in 2026, combined with the largest single-day gain in LME nickel futures in over three years, triggering strong market expectations of a reversal in the nickel supply-demand pattern. China First Heavy Industries indirectly benefits from participating in the Indonesia Delong Industrial Park ferronickel project, and combined with the market popularity of the industrial machine tool sector’s 2 consecutive limit-ups, it has attracted active inflows of institutional and foreign capital.

However, investors should clearly recognize that the company’s fundamentals have not yet improved, it is still in a loss-making state, its core business is equipment manufacturing rather than nickel production, and its actual exposure to nickel business is limited. Risk factors such as high nickel inventories, the supply-demand pattern not yet completely reversed, and uncertainty about the implementation of Indonesia’s production cut policy cannot be ignored. After consecutive limit-ups, the stock price has reached a 52-week high, and the risk of technical correction is accumulating.

Investors should rationally assess the sustainability of short-term speculative gains and avoid chasing highs at elevated levels. For short-term traders, they can pay attention to the opportunity to re-enter after the limit-up is opened or the intervention opportunity after volume expansion and turnover, while setting RMB 4.60 (5-day moving average) as the stop-loss level. For medium and long-term investors, it is recommended to wait for clearer signals of fundamental improvement before making decisions, focusing on the implementation of Indonesia’s production cut policy and the actual income contribution of the company’s nickel projects.