According to Futu Securities APP, HSBC Global Research recently released a research report stating that despite some unfavorable factors expected in the near term, the bottleneck in alumina supply will gradually be resolved as the peak season ends. The bank still sees a positive outlook for China's aluminum industry in 2025, expecting the profit margin to continue to rise. The bank maintains 'buy' ratings on Aluminum Corporation of China (02600, 601600.SH) and Chinahongqiao (01378) with target prices of HK$6.40, CNY 10.00, and HK$16.00 respectively.

The bank stated that it is optimistic about integrated aluminum companies (Aluminum Corporation of China and Chinahongqiao) as it believes that the rising profit margin will continue for a long time with an upward risk in 2025. Reasons include: 1) Expected tight supply in the value chain (bauxite, alumina, aluminum) in 2025, any interruption could easily lead to shortages and price increases; 2) Demand closely related to energy transition, and energy transition will continue to be a focus of current economic stimulus plans; 3) Valuations are not high, dividend yields are attractive.

The bank mentioned that the bottleneck in alumina supply should improve in early 2025, but any new interruptions could easily lead to re-shortages. Following the suspension of exports in Guinea, alumina prices hit a historic high. However, alumina prices are expected to stabilize and may decline in early 2025. Reasons include: 1) Increased bauxite supply after the end of the Guinean rainy season (November); 2) More alumina refineries are expected to be commissioned in Asia (especially Indonesia and India); 3) Yunnan reducing aluminum production during the dry season, leading to a decrease in alumina demand. Therefore, the bank forecasts that the global alumina supply bottleneck will ease in early 2025, with supply becoming more abundant in 2026. However, the bank added that although the supply issues of bauxite and alumina are expected to be resolved in 2025, the supply and demand of these two materials have just balanced, so the bank believes alumina prices will remain high and support aluminum prices.

Additionally, the bank also mentioned that the peak season has ended, and it is not surprising that Yunnan's aluminum production control will continue. According to Shanghai Metals Market, many downstream producers reported a decrease in orders after experiencing a strong demand peak from September to October. The bank also expects no significant surprises in Yunnan's production control this year, reasons being: 1) Strong hydropower generation so far this year due to abundant rainfall; 2) More wind and solar energy to supplement power; 3) Weak cement demand and reduced polysilicon production leading to decreased electricity consumption.