Open Source Securities: Russia's plan to resume exporting aluminum to the United States may exacerbate the tight supply of primary aluminum in China.

Open Source Securities released a research report stating that since the implementation of sanctions against Russia by European and American countries in 2022, the amount of RUSAL flowing into China has increased significantly. The import volume from Russia to China from 2022 to 2024 is 462,000 tons, 1,176,000 tons, and 1,128,000 tons respectively, which is several times higher than the import volume of around 300,000 tons in 2020-2021 before the sanctions. Assuming that RUSAL resumes exports to the United States in 2025, with a neutral assumption of around 300,000 tons and an optimistic assumption of around 500,000 tons, the corresponding decrease in China's imports from Russia will be 26.6% and 44.3%. Without considering changes in imports from other sources, China's total imports will decrease by 14.0% and 23.4%. Against the backdrop of limited domestic capacity expansion, the reduction in import volume may exacerbate the tightness of domestic primary aluminum supply, widening the supply-demand gap. Recommended targets include Yunnan Aluminium (000807.SZ), CHINAHONGQIAO (01378), and Tianshan Aluminum Group (002532.SZ), while beneficiaries include Aluminum Corporation Of China (601600.SH, 02600). The main points of Open Source Securities are as follows: The resumption of Russian aluminum exports to the United States may exacerbate the tightness of China's primary aluminum supply On February 25th, Russian President Putin stated that Russia is prepared to resume supplying aluminum to the U.S. market, selling approximately 2 million tons of aluminum to the United States annually. As the world's third-largest primary aluminum producer, Russia's exports were mainly directed towards China, Europe, and the United States before the Russia-Ukraine conflict. After the implementation of sanctions against Russia by Europe and America in 2022, the volume of Russian exports to China increased significantly. If U.S. sanctions against Russia are loosened and RUSAL resumes exports to the United States, it could to some extent alleviate the pressure on China's imports. Considering that the peak of U.S. imports of unwrought non-alloy aluminum and aluminum alloy from Russia since 2012 was around 720,000 tons, with a neutral assumption of around 300,000 tons in 2025 and an optimistic assumption of around 500,000 tons, the corresponding decrease in China's imports from Russia will be 26.6% and 44.3%. Against the backdrop of limited domestic capacity expansion, the reduction in import volume may exacerbate the tightness of China's primary aluminum supply, widening the supply-demand gap. United States: Broadening sources of primary aluminum, alleviating aluminum price increases due to tariffs Impact on the United States: Over the years, U.S. imports of aluminum-containing products from Russia have included unwrought non-alloy aluminum, unwrought aluminum alloys and aluminum barrels, kitchen aluminum utensils, aluminum containers, and other aluminum products, with the core products being unwrought aluminum and aluminum alloys. Before 2022, the United States imported unwrought aluminum and aluminum alloys mainly from Russia and Canada. After the sanctions on RUSAL due to the Russia-Ukraine conflict, U.S. imports from Russia dropped to zero, while imports from Canada continued to rise. In 2024, imports of unwrought aluminum and aluminum alloys from Canada accounted for 76% of the total imports. Since 2012, the peak of U.S. imports of unwrought aluminum and aluminum alloys from Russia was in 2016-2017, reaching 720,000 tons, accounting for approximately 15% of imports. If RUSAL resumes supplying the United States, it can broaden the sources of aluminum raw materials for the United States, to some extent alleviating the aluminum price increases caused by tariffs. Russia: The United States is the world's second-largest consumer of aluminum, Russia can enjoy stable orders Impact on Russia: Russia is the world's third-largest primary aluminum producer, with its production mainly contributed by RUSAL. In 2023, RUSAL's primary aluminum production reached 3.847 million tons, and with the ramp-up of Taishet's capacity, it is expected that RUSAL's primary aluminum production will reach 3.9 million tons in 2024, supplying 5% of the world's aluminum production. The United States is the world's second-largest consumer of aluminum, and after resuming exports, RUSAL can enjoy stable orders. Risk Warning: Risks related to global trade policies, major countries' tariff policies, and unexpected growth in global primary aluminum production.