The Zhitong Finance App learned that UBS released a research report saying that in China's basic materials industry, aluminum performance is expected to outperform the industry, mainly due to limited increase in production capacity and frequent seasonal production cuts. The bank also expects the fundamentals of China Alcoa Holdings (02600) to improve. Based on strong aluminum prospects and continued improvement in the company's fundamentals, the bank raised its rating from “neutral” to “buy”, and the target price was raised from HK$4 to HK$5.

The bank mentioned that although production capacity growth in China is limited, China Alcoa's aluminum production capacity will record an increase this year. In addition, the company is building a new alumina refinery along the coast, which can also ensure relatively stable grid electricity prices. Furthermore, the Group's bauxite self-sufficiency rate is about 65%, which is the highest level among smelters, allowing it to benefit from the recent rise in bauxite prices. China's total aluminum production capacity is close to the upper limit of 45 tons per year, and the remaining quota is quite limited. According to the pipeline currently under construction, the bank expects an additional production capacity of 380 ktpa this year, compared to zero in 2025. Furthermore, in recent years, dry-season aluminum production restrictions have often been reported in the southwest region, posing a risk of rising aluminum prices.