Hong Kong Stock Concept Tracking | Aluminum oxide price continues to soar Association speaks out: Irrational factors exist in the trend. How to view the future market? (with concept stocks)

Since the beginning of 2024, the price of alumina has been steadily rising. On November 11, the main contract of alumina futures, 2501, once again reported an increase, reaching a high of 5477 yuan/ton in intraday trading, setting a new high since listing. In the spot market, according to Mysteel statistics, the domestic weighted average monthly price of alumina in October 2024 was 4615 yuan/ton, an increase of 617 yuan/ton compared to the previous month, an increase of 15.43% month-on-month. Analysts pointed out that the main reason for the sharp rise in alumina prices is the supply side issues. On one hand, due to factors such as environmental protection, domestic ore mining is restricted, leading to an increasing reliance on imported bauxite; on the other hand, major bauxite importing countries such as Guinea are affected by uncertain factors such as weather, policies, and shipping, leading to a tight supply of ore overall, further restricting the domestic alumina production capacity. In addition, the overseas alumina price has risen to $680/ton, with an annual increase of 94%, causing the import cost of alumina to rise to over 5700 yuan/ton, the domestic import window remains closed, exacerbating the tight supply situation. The demand in the electrolytic aluminum market is also increasing continuously, with new production and restart speeds exceeding expectations. According to statistics, China's operating capacity of electrolytic aluminum has reached 43.988 million tons/year, an increase of 2.09% year-on-year, and the operating rate of electrolytic aluminum enterprises has reached as high as 97%. Approaching the end of the year, due to holiday factors and winter stocking, downstream aluminum smelters must implement rigid stocking, the problem of spot circulation cannot be alleviated, leading to a continuous increase in the purchasing price of alumina, creating a tight supply situation. Regarding the "crazy surge" in alumina prices, some are pleased while others are worried. In the first half of 2024, alumina companies released their semi-annual reports, where Aluminum Corporation of China, CHINAHONGQIAO, Shandong Nanshan Aluminium, and Tianshan Aluminum Group all mentioned that the performance growth in the alumina segment was the major factor in the strong performance increase in the first half of 2024 for each company. As the profit margins of alumina companies continue to rise, the production profits of electrolytic aluminum companies are shrinking. According to Yao Xin, a researcher at Shanghai Ganglian E-Commerce Holdings' aluminum division, the profit of electrolytic aluminum production companies has significantly decreased compared to the high points earlier in the year. To resolve the risks of an overheated market, since October, the Shanghai Futures Exchange has made multiple adjustments to the margin ratio, price limit, and trading fees of alumina futures contracts. On November 8, the Exchange further tightened control measures by imposing restrictions on opening positions and withdrawals for clients trading alumina futures. On November 11, a responsible person from the China Nonferrous Metals Industry Association publicly stated the current situation in the alumina market, highlighting the existence of irrational factors in the price trend of alumina, and the significant speculation by capital. Based on current costs and price calculations, the average profit in the alumina industry has exceeded 2000 yuan/ton, which is unsustainable and should not continue. Looking ahead, industry insiders analyze that the tight situation in ore supply has not yet completely changed, downstream demand remains high, reinforced by the expectations for winter stocking and the uncertainty faced by alumina production during the northern heating season under environmental protection policies. It is expected that the spot price of alumina will continue to rise in the fourth quarter. Gu Fengda, Chief Analyst for Nonferrous Metals at Guosen Futures, stated that considering the current tight supply and demand situation in the alumina market, it may be difficult to reverse in the short term, and the release of production capacity needs to be observed. Additionally, there are expectations for increases in the supply side and expectations of aluminum production companies stopping production, which may gradually affect the purchasing sentiment in the spot market and the choice of market funds. Combined with the consecutive regulatory measures, the upside of futures prices is limited, and it is expected that the alumina futures price will return to a range around the spot price fluctuation. Related concept stocks: Aluminum Corporation of China (02600): In mid-October, HSBC Global Research released a research report stating that in September, China's steel/aluminum exports increased significantly by 26%/19% year-on-year, and metal prices such as aluminum rebounded recently in the improved market sentiment. Therefore, HSBC expressed in the report that with metal prices rebounding in improved market sentiment and the expected stronger performance of metals in the peak season, there is still potential for further increase in aluminum prices. Given the strong fundamentals, the agency is optimistic about the overall size of the Chinese aluminum metal market and maintains a "buy" rating on Aluminum Corporation of China (601600.SH, 02600) and CHINAHONGQIAO (01378). CHINAHONGQIAO (01378): In early October, Shenwan Hongyuan Group issued a research report for the first time covering CHINAHONGQIAO (01378) and gave it a "hold" rating, with estimated net profits for 2024/2025/2026 of 19/20.2/21.4 billion RMB. Considering the company's significant integrated advantage as an electrolytic aluminum production enterprise, leading overseas bauxite resource layout, high self-sufficiency in alumina and electricity, and the background of the continuous increase in dependence on foreign bauxite in China, combined with the low operation of thermal coal prices, the company has outstanding cost advantages. With the improvement in the electrolytic aluminum industry sentiment, performance is expected to continue to grow.