Morgan Stanley: Capacity integration in the aluminum industry is beneficial to industry leaders Aluminum Corporation of China (02600) and CHINAHONGQIAO (01378).

Morgan Stanley's research report stated that the National Development and Reform Commission published an article last Friday (26th) titled "Vigorously Promoting the Optimization and Upgrading of Traditional Industries", mentioning the strengthening of management and optimization layout of the alumina and copper smelting industries, and encouraging large-scale backbone enterprises in alumina and copper smelting to implement mergers and restructuring. The bank believes that the price of alumina is continuously under pressure due to increasing supply, with the current installed capacity reaching 1.1 billion tons and a utilization rate of 84%, while Chinese demand has basically reached its limit. The bank believes that new policies may limit the addition of planned alumina production capacity and expects capacity consolidation to benefit industry leaders such as Aluminum Corporation Of China (02600) and CHINAHONGQIAO (01378). However, a large amount of approved capacity in the pipeline may still put pressure on alumina prices by 2026. At the same time, lower annual copper concentrate processing fees/smelting fees and long-term contract concentrate volumes may result in a reduction in refined copper production by 2026. These factors, combined with relatively stable demand, should support copper prices fluctuating at high levels, benefiting companies like Zijin Mining Group (02899), CMOC Group Limited (03993), MMG (01208), and Jiangxi Copper (00358).