Hong Kong Stock Concept Tracking | Aluminum premiums in the US physical market hit a record high, global aluminum supply may be drastically tightened (with concept stocks)

The Zhitong Finance App learned that the premium price of aluminum in the US physical market has set a new record of more than 990 US dollars per ton. According to the news, on March 11, local time, US President Trump said that he had instructed the Secretary of Commerce to impose an additional 25% tariff on all steel and aluminum products from Canada, bringing the tariff level to 50% on all steel and aluminum entering the US from Canada, which will take effect on the morning of March 12.

Manufacturers stocked up stocks before Trump imposed tariffs on metals, causing the prices of the three major industrial raw materials of aluminum, steel, and copper in the US market to continue to rise for several weeks. In the process, the prices they pay have been decoupled from the prices paid by manufacturers in other major industrial economies such as Germany and Japan. The spot supply price of aluminum in the US is about 23% higher than in Europe, and the price of steel is about 40% higher, exceeding the 25% tariff that Trump plans to levy on Wednesday. Copper tariffs may not be implemented until a few months later, but according to calculations, US manufacturers are already paying about 10% more than European buyers.

Trump believes that tariffs will boost US production in the long run, but there is growing evidence that consumers will bear short-term costs. US manufacturers are paying far more for aluminum, steel, and copper than their overseas rivals. Even before metal tariffs officially came into effect, this trend weakened business confidence and raised concerns about inflation.

According to J.P. Morgan's forecast, global aluminum supply will be drastically tightened, with a supply gap of more than 600,000 tons this year. The bank said in a report that the rise in US aluminum prices due to 25% import tariffs will more likely cause the country's idle production capacity to restart. On the European side, the restart will be determined by profit margins. J.P. Morgan said, “We still believe that shortage fundamentals continue to indicate that aluminum prices will rise to $2,850 per ton in the fourth quarter of 2025 to stimulate the necessary restart of production capacity.

Analysts said that aluminum production in countries subject to import duties may shift to Europe, where the duty-paid spot premium has fallen to $240 per ton, the lowest point in 11 months, and has declined 35% since the beginning of 2025. In the future, the global aluminum industry chain may face restructuring, and Europe is expected to be the biggest winner.

Furthermore, on February 25, Russian President Vladimir Putin said that Russia is preparing to resume aluminum supply to the US market and sell about 2 million tons of aluminum to the US every year. Since Europe and the US imposed sanctions on Russia in 2022, Russia's exports to China have risen sharply. If US sanctions against Russia are loosened, Rusal's exports to the US will resume, which may exacerbate the tight supply of raw aluminum in China.

Domestically, with the development of emerging fields such as new energy vehicles, solar panels, robots, and 5G applications, aluminum demand is expected to grow steadily; China's aluminum production capacity is close to full capacity, and new supply is limited, providing strong support for aluminum prices. The agency expects aluminum prices to rise 7.8% in 2025.

Guotai Junan Securities said that the two sessions will release a signal of steady growth, and macroeconomic expectations are improving. At the same time, the operating rate of copper and aluminum processing continues to recover after the holiday season. As the peak season approaches, the social treasury has already reached an inflection point, providing price support.

Related concept stocks:

Hongqiao, China (01378): Supported by falling alumina prices and high prices of aluminum alloy products, the profitability of the company's aluminum business will increase. DBS predicts that between 2023-2026, China's Hongqiao's revenue will grow at a CAGR of 6% and profit at a CAGR of 23%.

China Aluminum (02600): China Aluminum disclosed the 2024 pre-increase results announcement. It is expected to achieve net profit of 120-13 billion yuan, +79%-94% year over year; net profit after deducting non-return to mother of 115-12.5 billion yuan, +74%-89% year over year; basic earnings per share of 0.7-0.76 yuan, +82%-97% year over year. Guosheng Securities believes that the sharp rise in alumina prices in 24Q4 led to a sharp month-on-month increase in the company's Q4 performance, and the annual results may have reached a new high since its establishment.

Jiangxi Copper Co., Ltd. (00358): Jiangxi Copper owns Dexing Copper Mine, the largest open pit copper mine in China. In addition to the Dexing copper mine, there are also four wholly-owned mines: Yongping Copper Mine, Chengmenshan Copper Mine, Wushan Copper Mine, and Yinshan Copper Mine. The total copper resource reserves of the company's five major mines are 7.3 million tons, with an average surplus that can be mined for 37 years. The company's five major mines account for about 21% of the country's copper reserves.