News summary

Aluminum sector rose stronglybingogrande, shares of China Hongqiao and Chinalco surged 3.5 percent respectivelybingogrande.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.

bingogrande| Shares of China Hongqiao and Chinalco surged; Rio Tinto announced force majeure for alumina shipments, and CITIC Securities was optimistic about investment opportunities in the aluminum sector

Newsletter text

[Aluminum stocks showed strong upward momentum in early trading] Aluminum stocks showed strong upward momentum in early trading. China Hongqiao (01378) shares rose 3.47% to HK$12.24 per share; China Aluminum Corporation (02600) followed closely, with an increase of 2.81%, and its share price stopped at HK$5.85; RUSAL (00486) was not willing to lag behind, recording a 2.26% increase and quoted 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.