Shenwan Hongyuan Securities·2025-10-16 11:15Investment Rating - The report maintains a positive outlook on the aluminum recycling industry, driven by resource supply security and dual carbon goals, indicating a favorable investment environment for recycled aluminum [1]. Core Insights - The recycled aluminum industry is becoming a significant growth area in China's aluminum supply, with an expected production of approximately 10.5 million tons in 2024, accounting for about 19% of total aluminum supply. The target is to exceed 15 million tons by 2027, reflecting a CAGR of 13% from 2024 to 2027 [2][11]. - The demand for resource supply security is increasing, with recycled aluminum seen as a key solution to reduce reliance on imported bauxite, which had a dependency rate of over 77.6% in the first eight months of 2025. The domestic supply of recycled aluminum is primarily sourced from social waste aluminum, which is expected to exceed 80% in 2024 [2][4]. - The dual carbon constraints and the establishment of a carbon market are accelerating the visibility of the green premium associated with recycled aluminum. The carbon emissions from producing one ton of electrolytic aluminum are approximately 11.2 tons, while recycled aluminum only emits 0.23 tons, making it a significantly lower carbon option [2][4]. - The potential of urban mining is substantial, with accelerated development of recycling systems. Policies are being implemented to support small recycling enterprises, and a national recycling platform is being established to enhance the recycling infrastructure [2][5]. Summary by Sections 1. Recycled Aluminum as a Key Supply Source - Recycled aluminum, derived from waste aluminum through melting and refining, is a crucial component of the aluminum supply chain, with a short industrial chain and high recovery value [2][11]. - The industry is expected to grow significantly, with a target of 15 million tons by 2027, supported by government policies promoting high-quality development in the aluminum sector [2][11]. 2. Resource Supply Security and Dual Carbon Goals - The increasing demand for resource supply security positions recycled aluminum as a critical strategy to mitigate reliance on foreign bauxite, especially as domestic bauxite reserves are limited [2][4]. - The green value of recycled aluminum is becoming more apparent, with the anticipated tightening of carbon quotas in the national carbon market expected to drive up carbon prices and enhance the green premium for recycled products [2][4]. 3. Urban Mining Potential and Recycling System Development - The recycling system is being rapidly developed, with policies favoring small recycling enterprises and the establishment of a national recycling platform to improve the efficiency of aluminum recovery [2][5]. - The peak of automobile scrappage is expected to occur around 2026, which will significantly increase the supply of waste aluminum, alleviating raw material bottlenecks [2][5]. 4. Investment Recommendations - The report suggests focusing on companies with high raw material security, advanced recycling technologies, and the ability to produce high-premium products, such as Ming Tai Aluminum, Shunbo Alloy, Yiqiu Resources, Lizhong Group, and Yongmaotai [2][3].