Against the backdrop of limited new production capacity in the country, the reduction in import volumes may exacerbate the supply tightness of raw Aluminum domestically, widening the supply-demand gap.
According to the Zhito Finance APP, Kaiyuan Securities released a Research Report stating that since the sanctions imposed by Europe and the USA on Russia in 2022, the Inflow of RUSAL into China has significantly increased, with imports from Russia for 2022-2024 being 0.462, 1.176, and 1.128 million tons respectively, multiplying several times compared to the import volume of about 0.3 million tons before sanctions in 2020-2021. Assuming that RUSAL restores exports to the USA in 2025, under a neutral assumption, it would be about 0.3 million tons, and under an optimistic assumption, about 0.5 million tons. Correspondingly, China's imports from Russia will decline year-on-year by 26.6% and 44.3%. Without considering changes in imports from Other sources, China's total imports will decrease year-on-year by 14.0% and 23.4%. Given the limited new domestic production capacity, the adjustment of import volume may exacerbate the tight supply of primary Aluminum in the domestic market, widening the supply-demand gap. Recommended symbols include Yunnan Aluminium (000807.SZ), CHINAHONGQIAO (01378), and Tianshan Aluminum Group (002532.SZ); beneficial symbols include Aluminum Corporation Of China (601600.SH, 02600).
KYG Securities' main points are as follows:
Russia's plan to restore exports of Aluminum to the USA may exacerbate the tight supply of primary Aluminum in China.
On February 25, Russian President Putin stated that Russia is ready to resume Aluminum supplies to the US market, selling about 2 million tons of Aluminum to the USA annually. As the third-largest producer of primary Aluminum globally, prior to the Russia-Ukraine conflict, its exports mainly went to China, Europe, and the USA. Since the European and American sanctions against RUSAL in 2022, the amount exported to China has significantly increased. If the USA eases sanctions against Russia, the resumption of RUSAL's exports to the USA could alleviate some import pressure on China. Considering that from 2012 to now, the peak import volume of unalloyed Aluminum and Aluminum alloys from Russia to the USA was about 0.72 million tons, under a neutral assumption, resuming about 0.3 million tons in 2025, and under an optimistic assumption, about 0.5 million tons, will correspondingly lead to a year-on-year decline of 26.6% and 44.3% in imports from Russia to China. Given the limited new domestic production capacity, the adjustment of import volume may exacerbate the tight supply of primary Aluminum in the domestic market, widening the supply-demand gap.
USA: Expanding sources of primary Aluminum to alleviate the price increase caused by tariffs.
Impact on the USA: Historically, the USA's imports of Aluminum-containing products from Russia have included unalloyed Aluminum, Aluminum alloys, Aluminum barrels, kitchen Aluminum utensils, Aluminum containers, and other Aluminum products, with the core products being unalloyed Aluminum and Aluminum alloys. Before 2022, the USA mainly imported unalloyed Aluminum and Aluminum alloys from Russia and Canada. After sanctions against RUSAL due to the Russia-Ukraine conflict, the import volume from Russia dropped to zero, while imports from Canada steadily increased. In 2024, imports of unalloyed Aluminum and Aluminum alloys from Canada accounted for 76% of total imports. From 2012 to the present, the peak import volume of unalloyed Aluminum and Aluminum alloys from Russia to the USA occurred in 2016-2017, reaching a high of 0.72 million tons, accounting for about 15% of imports. If RUSAL resumes supplies to the USA, it could expand the sources of Aluminum raw materials for the USA, alleviating the price increases caused by tariffs to some extent.
Russia: The USA is the second largest Aluminum Consumer in the world, and Russia can enjoy stable Orders.
Impact on Russia: Russia is the third largest primary Aluminum producer in the world, with its production mainly contributed by RUSAL. In 2023, RUSAL's primary Aluminum production reached 3.847 million tons. With the ramp-up of Taishet's capacity, it is expected that RUSAL's primary Aluminum production will reach 3.9 million tons in 2024, anticipating to supply 5% of the Global Aluminum production. Meanwhile, the USA is the second largest Aluminum Consumer in the world, and RUSAL can enjoy stable Orders after the restoration of exports.
Risk reminder: Risks associated with Global trade policies, tariff policies of major Global countries, and unexpected growth in primary Aluminum production.
