Hong Kong Stock Concept Tracking | It takes time to address the tight supply of bauxite. Institutions are optimistic about the turning point of aluminum oxide (attached concept stocks).

The price of alumina has risen by 40% since the fourth quarter of 2024 and remained at a high level of 5700 yuan per ton in December 2024. The global research team of Bank of America published a research report stating that although supply is gradually recovering, the tight supply of bauxite in the industry is not expected to be fully resolved in the near future, and the supply of alumina may remain tight until the first quarter of 2025. Although China is expected to have 12.3 million tons of new alumina production capacity in 2025, it is estimated that only 6 million tons of bauxite resources are guaranteed, which means that the remaining production capacity may face obstacles when starting up. Therefore, bauxite may become a cost support for alumina next year. The supply of Guinean ore and the production of alumina are the main conflicting points in 2025. A research report from CITIC SEC pointed out that the easing supply-demand situation and catalytic events have significantly weakened the price of alumina. Looking ahead to 2025, we believe that the central price of alumina is likely to decrease; as supply constraints strengthen and demand improvement is expected, the elasticity of aluminum price can still be expected. We are optimistic about the investment value of the aluminum sector driven by profit margin expansion per ton of aluminum and dividend and valuation logic. China Securities Co.,Ltd. released a research report stating that the early commissioning of new projects is the main driver behind the return of alumina prices to fundamentals. Although the decline in alumina prices dragged down aluminum prices, more than 60% of aluminum plants operating at a loss have limited the downward space for aluminum prices, indicating that the profitability of electrolytic aluminum has bottomed out and rebounded. With the global aluminum supply growth rate of only 1.6% in 2025, amid loose monetary policies and proactive fiscal policies, consumption has significant upward potential and aluminum prices are expected to resume an upward trend. Seize the current opportunity for profit reversal and position related targets. Related Hong Kong stocks in the aluminum industry chain: CHINAHONGQIAO(01378): According to calculations by institutions, it is estimated that its alumina division will contribute a profit growth of 700 yuan per ton in the fourth quarter of the 2024 fiscal year, an increase of 1.8 billion yuan quarter-on-quarter, and the aluminum business will contribute a profit growth of 200 yuan per ton, or an increase of 400 million yuan quarter-on-quarter. It is estimated that this means that the net profit in the fourth quarter will exceed 8 billion yuan. Due to the high price of alumina, the industry's profit margin is currently at a loss of 1000 yuan/ton, but due to CHINAHONGQIAO's self-sufficiency rate of alumina being greater than 100%, the impact on its earnings is limited, and the institution believes that the aluminum profit margin of CHINAHONGQIAO is still considerable. Aluminum Corporation Of China02600): Aluminum Corporation Of China's wholly-owned subsidiary Chinalco New Material achieved a net profit of 695 million yuan in 2024Q3, with Aluminum Corporation Of China holding a 100% stake in it; Yunnan Aluminium achieved a net profit of 1.301 billion yuan in 2024Q3, with Aluminum Corporation Of China holding a 29.1% stake in it. These two subsidiaries contribute a combined net profit of around 1.07 billion yuan to Aluminum Corporation Of China, while the cost increase of other subsidiaries has led to a slight decline in the company's sales profit margin. In the first three quarters of 2024, the company achieved a metallurgical alumina production of 12.57 million tons, an increase of +0.88% year-on-year. In 24Q3, the company's electrolytic aluminum production was 1.99 million tons, an increase of +140,000 tons quarter-on-quarter (mainly due to the earlier restart of Yunnan Aluminium this year), an increase of +120,000 tons year-on-year. In 24Q3, alumina production was 5.55 million tons (including 4.37 million tons of metallurgical grade alumina), an increase of +520,000 tons quarter-on-quarter.