Aluminum：Price consolidation overdone

Investment Rating - The report maintains an "Outperform" rating for China Hongqiao (1378 HK) with a target price of HK$12.80, indicating a potential upside of 31$2,415/t and US$2,620/t respectively [11][19]. Summary by Sections Aluminum Price Trends - The LME aluminum price has seen an 18% decline since late May, but the report suggests this is excessive given the tight supply conditions in the global market [9][10]. - The report notes that the aluminum ingot premium has risen significantly, indicating ongoing supply tightness [1][9]. Demand and Supply Dynamics - China's aluminum demand remains robust, with a 6.1% YoY increase in apparent consumption in 1H24, driven by sectors such as transportation and power [19][21]. - Supply constraints are highlighted, with China's total aluminum production capacity capped and utilization rates reaching record highs, limiting future growth [18][17]. Company-Specific Insights - China Hongqiao is identified as a cost-competitive player in the aluminum sector, benefiting from its vertical integration and access to low-cost hydropower [38]. - The report emphasizes Hongqiao's strong balance sheet and higher profitability forecasts compared to its peers, making it a preferred investment choice [38][37].