The Zhitong Finance App learned that aluminum stocks generally rose in early trading. As of press release, China's Hongqiao (01378) rose 2.97% to HK$10.02; China Aluminum (02,600) rose 2.57% to HK$5.18.
CITIC Securities said that the current resilience of demand for electrolytic aluminum has significantly exceeded expectations. Construction of construction profiles has not declined significantly. Construction of industrial profiles and cables is at a new high level in the same period in recent years, and sheet foil production has increased slightly year-on-year and is expected to continue to improve. The apparent decline in inventory under short-term supply shocks verifies the resilience of demand. It is expected that although there will still be an increase in the supply of electrolytic aluminum during the year, the growth rate will decline. In summary, it is expected that the domestic electrolytic aluminum industry will show a tight balance during the year, and aluminum prices and profits per ton of aluminum will remain high.
Citi believes that while supply is still tight, aluminum profit margins may remain high in China for a longer period of time due to strong demand for photovoltaic installations and new energy vehicles. The further rise in aluminum prices is also related to the manufacturing inventory replenishment cycle, which is likely to begin in FY2024.