News summary
The aluminum sector rose strongly, with shares of China Hongqiao and Chinalco respectively rising 3.3 percentarcademachine.47% and 2.81%. Rio Tinto Group announced force majeure for shipments of alumina from Australia due to supply shortages. CITIC Securities expects that this event will catalyze the daily limit of aluminum oxide, effectively promote the improvement of industry profits, and maintain the aluminum sector's "stronger-than-large market" rating.
Newsletter text
[Aluminum stocks showed strong upward momentum in early trading] Aluminum stocks showed strong upward momentum in early trading, with China Hongqiao (01378) shares rising 3.47% to HK$12.24 per sharearcademachine; Aluminum Corporation of China (02600) followed closely, with a 2.81% increase and its share price stopping at HK$5.85; RUSAL (00486) was not willing to lag behind, recording a 2.26% increase and quoted at HK$2.71.
Rio Tinto disclosed in a press release that its Yarwun smelter in Australia and Queensland Alumina Limited have declared force majeure for alumina shipments due to a shortage of natural gas for power generation. Affected by this, the alumina production capacity of these two plants has fluctuated, which is expected to affect 4% of global operating capacity.
CITIC Securities analyzed that Rio Tinto's statement of force majeure on Australian alumina shipments triggered a daily limit in the alumina futures market. They also pointed out that the tight supply of domestic bauxite ore may continue, limiting the growth of alumina production. In addition, the resumption of electrolytic aluminum production in Yunnan will drive growth in demand for alumina, which will further promote the strong rise in alumina prices and is expected to significantly increase the profit level of the entire industry.
In view of the above analysis, CITIC Securities maintains a positive evaluation of the aluminum sector and continues to give it a "stronger than the market" rating, showing its optimism about the investment prospects of the aluminum sector.
