J P M O R G A N Asia Pacific Equity Research 09 September 2025 Aluminium Dashboard Global demand +3% YTD, inventory remains low but has trended higher since June Key takeaways: (1) Global aluminium demand is up 3% YTD through July (China +4% and RoW +2%); however, production is softer at 1.5% globally (China +2%, RoW flat). (2) Global inventories remain low at ~1,125kt, but have climbed up ~300kt since late June (still well below 2024 levels, and near decade lows for this time of year). (3) Alumina prices h ...

BRUSSELS (Reuters) -The European Union's aluminium sector is urging the European Commission to impose duties of around 30% on exports of scrap metal to stop it flooding out of the bloc and leaving domestic producers short. EU aluminium scrap exports hit a record 1.26 million metric tons in 2024, according to industry group European Aluminium, around 50% higher than five years ago, with most heading to Asia. The EU industry says the situation has since worsened due to U.S. President Donald Trump's import ...

Core Viewpoint - Nanshan Aluminium International Holdings reported strong interim results for 1H25, with significant revenue and profit growth driven by rising alumina sales prices and volumes [1][2]. Financial Performance - Revenue increased by 41.0% year-on-year to approximately US$597 million, while profit attributable to shareholders surged by 124.2% year-on-year to around US$248 million, slightly exceeding expectations due to higher-than-expected sales prices [1]. - Gross profit rose by 70.1% year-on-year, with gross margin improving by 8.7 percentage points to 50.9% [2]. - The selling price of alumina increased by 36.9% year-on-year to US$529 per ton, while operating costs rose by 16.3% year-on-year to US$260 per ton [1]. Tax and Dividend - The company will face an increase in corporate income tax to 15% effective January 1, 2025, due to compliance with the Global Anti-Base Erosion Rules [2]. - An interim dividend was declared for the first time since the IPO, with a payout ratio of approximately 20% to reward shareholders [2]. Production Capacity and Expansion - Nanshan Aluminium is a leading alumina producer in Southeast Asia, with ongoing project construction progressing faster than expected [3]. - The company has built alumina production capacity of 3 million tons per year, with Phase II of a new project expected to start production in Q4 2025 or Q1 2026 [3]. Competitive Advantages - Cost advantages stem from Indonesia's abundant bauxite and coal resources, along with an expanding deep-water port to enhance logistics efficiency [5]. - Regional advantages include tax incentives for up to 20 years in the Galang Batang KEK, allowing alumina products to be utilized throughout Southeast Asia [5]. - Shareholder advantages arise from strong industrial synergies among the major shareholders in midstream alumina production, downstream consumption, and upstream bauxite supply [5]. Financial Forecasts and Valuation - Net profit forecasts for 2025 and 2026 have been raised by 7% and 9% to US$374 million and US$500 million, respectively [5]. - A-shares are trading at 9x and 6x estimated P/E for 2025 and 2026 [5]. - The target price has been raised by 58% to HK$52.59, reflecting a 25% upside based on upward earnings revisions and improving market risk appetite [5].

So we're getting some detail now on what the U.S. and EU agreed in terms of how they're going to trade with each other. Remember, the initial agreement came out a couple of weeks ago. Now we're getting details.So you're going to have that 15% U.S. tariff on goods coming in from Europe. But it going to be concessions on sectors. So European cars, for example, European semi conductors, European pharmaceuticals, they will be paying a reduced tariff on the otherwise would have.In terms of those sectoral tariffs ...

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Aluminium and Alumina - **Geographical Focus**: Indonesia, China, India, and global markets Aluminium Market Insights - **Supply and Demand Outlook**: - Primary aluminium demand growth is expected to be around 2.5% for 2024/25, slightly below the trend of 3-4% [2] - Supply growth is anticipated to match demand, leading to a modest surplus in the global aluminium market [2] - Limited supply growth is expected due to China smelter run rates being at the 45 million tonnes (mt) cap, with potential projects in Indonesia, India, Middle East, and Africa contributing modestly over the next 2-3 years [2][8] - The LME price is above the cost curve, indicating an improving supply and demand outlook [2] - **Investment Recommendations**: - Preferred stocks for aluminium exposure include Hydro and Press Metal (BUY) while Alcoa and S32 are rated Neutral [1] - **Medium-Term Price Risks**: - Limited scope for the industry to quickly lift supply when demand improves, resulting in tighter markets and medium-term price risks skewed to the upside [2] Alumina Market Insights - **Price Trends**: - After a sharp decline in the first half of 2025, alumina prices have bounced back, trading between $370-380 per tonne [3][41] - Prices are expected to remain anchored to the cost curve due to significant overcapacity in China and additional supply from Indonesia and India [3][41] - **Supply Outlook**: - China is expected to add 7-10 million tonnes of new capacity in 2025, contributing to overcapacity [3] - Approximately 6 million tonnes of projects are ramping up in Indonesia, with an additional 2.5 million tonnes in India [3][35] Indonesia's Role in Aluminium Supply - **Capacity Additions**: - Indonesia is expected to be a significant contributor to global supply growth, with 2.2 million tonnes of new aluminium supply projected over the next 3-4 years [10][22] - Current projects in Indonesia are constrained by insufficient land and power, limiting overwhelming growth in supply [10][15] - **Power Constraints**: - Aluminium smelting is power-intensive, requiring approximately 15 terawatt-hours (TWh) of power for 1 million tonnes of capacity [11][13] - The planned 2.2 million tonnes of aluminium smelters would consume about 40% of the power currently used by the nickel industry, necessitating a 10% growth in national power output over 3-4 years [13] Risks and Considerations - **Alumina Supply Risks**: - The combination of additional supply from Indonesia and overcapacity in China is likely to limit sustainable upside in alumina prices [3][41] - Potential disruptions in bauxite supply from Guinea could create upside risks for alumina prices, but sustained tightness is not the central case [34] - **Market Dynamics**: - The aluminium market is closely monitoring the evolution of Indonesia's industrial parks and smelter project pipeline, with measured growth in aluminium supply expected rather than overwhelming growth [15] Conclusion - The aluminium market is characterized by limited supply growth and a positive fundamental outlook, while the alumina market faces challenges from overcapacity and price volatility. Indonesia's role as a growing supplier is significant, but power constraints and project development challenges may temper expectations for rapid supply increases.

Emirates Global Aluminium is assessing the feasibility of an initial public offering, according to people familiar with the matter, potentially reviving plans for a deal that could rank among the largest-ever share sales in the Middle East https://t.co/0oKcFeW9ZP ...

Summary of Key Points from the Conference Call Industry and Company Involved - **Industry**: Sustainability and Decarbonisation in China - **Company**: Morgan Stanley Asia Limited Core Insights and Arguments 1. **Anti-Involution Campaign**: China's "anti-involution" campaign is a significant focus for investors, aiming to address price wars and overcapacity in key sectors crucial to decarbonisation goals [2][7][9] 2. **Decarbonisation Impact**: The anti-involution drive is expected to influence decarbonisation progress both within China and globally, particularly in "hard-to-abate" sectors such as cement, steel, and aluminium [2][10] 3. **Investor Interest**: There is a renewed investor interest in sustainability fund flows and energy transition themes in China, with an uptick in inflows into sustainability funds observed in Q1 2025 [3][9] 4. **Policy Signals**: Recent policy signals from China indicate a focus on tackling overcapacity, with discussions on various sectors including solar, materials, and new energy vehicles (NEVs) [8][10] 5. **Global Decarbonisation**: China's clean energy exports, including solar panels and electric vehicles, are projected to significantly reduce global CO2 emissions, with an estimated reduction of 220 million tonnes in 2024 alone [12] 6. **Competition Dynamics**: The current intense competition in China's cleantech sectors has kept decarbonisation costs low for other countries; however, a reduction in competition could lead to increased costs for these technologies abroad [13] Other Important but Potentially Overlooked Content 1. **Capacity Reduction Focus**: The focus on reducing old and dirty capacity in hard-to-abate sectors is a recurring theme, with the government actively checking for overproduction in coal and other sectors [10][12] 2. **Trade Reliance**: Many countries still rely on Chinese products for their decarbonisation efforts, which could face headwinds from trade tensions [12] 3. **Renewable Energy Standards**: New solar capacity built between 2022-2024 has already adopted new emission reduction standards, indicating progress in the sector [11] 4. **Long-term Investment Story**: China's decarbonisation remains a long-term secular investment story, with consistent emphasis on its relevance since 2020 [9] This summary encapsulates the critical insights from the conference call, highlighting the implications of China's anti-involution campaign on sustainability and decarbonisation efforts.

Summary of J.P. Morgan's China Metals Activity Tracker Industry Overview - The report focuses on the metals industry in China, specifically tracking inventory trends for steel, iron ore, copper, aluminum, and zinc as of the week ended July 18, 2025 [1][11]. Key Insights 1. **Copper Inventory Trends** - China typically experiences significant destocking of copper inventories from now until September. However, recent data shows a slowing pace of inventory drawdowns, with copper inventories increasing by 3,000 tons last week [1][12]. - The five-year average indicates a normal destocking of approximately 200,000 tons of copper during this period [1][12]. 2. **Steel Mill Margins** - There has been a notable improvement in China steel mill margins over the last three weeks, leading to a ~10% increase in iron ore prices to $102 per ton. Average hot-rolled coil (HRC) steel mill margins have returned to profitability for the first time since early 2023 [2][9]. - Rebar margins are close to breakeven, marking the strongest profitability since early 2023 [2][9]. 3. **Iron Ore Shipments and Production** - Iron ore shipments to China from Australia and Brazil have shown mixed results, with Australian shipments down by 4.3% week-over-week but up 8.2% year-over-year. Brazilian shipments increased by 23.9% week-over-week but decreased by 11.3% year-over-year [4][2]. - Total iron ore arrivals in China increased by 13.7% week-over-week, indicating a robust demand [4][2]. 4. **Impact of U.S. Tariffs on Copper** - A potential 50% tariff on U.S. copper imports, effective August 1, could reduce U.S. demand by approximately 4%, translating to a 0.2% decline in global copper demand [3][12]. - The U.S. exports around 540,000 to 580,000 tons of copper scrap annually, which could help mitigate a primary deficit of 700,000 to 800,000 tons per annum, although increased recycling capacity may take 2-3 years [3][12]. 5. **Physical Demand Indicators** - Despite recent increases in copper, aluminum, and zinc inventories, overall inventories remain at their lowest levels in over five years for this time of year, indicating tight physical markets [12][13]. - China's copper premium has risen by 70% in the last two weeks, reaching approximately $50 per ton, although it remains significantly below the year-to-date high of $103 per ton [12][13]. Additional Observations - The report highlights that the next ten weeks will be critical for assessing the health of Chinese physical copper consumers, as historical trends suggest a shift towards improved demand during this period [12][13]. - The report also includes detailed tables and figures illustrating inventory levels, shipment data, and price forecasts for various metals, providing a comprehensive view of the current market dynamics [4][9][34]. Conclusion - The J.P. Morgan report provides valuable insights into the current state of the metals industry in China, highlighting trends in inventory, pricing, and the potential impact of U.S. tariffs on copper demand. The data suggests a complex interplay of supply and demand factors that investors should monitor closely.

Summary of Key Points from the Conference Call Industry Overview - The conference call focused on the **aluminium and copper industries** in the context of recent US tariffs and trade flows, particularly in Europe and North America [1][2][3]. Aluminium Insights - **US primary aluminium imports** decreased by **15%** from 2024 levels in April and May, primarily affecting Canadian volumes due to tariffs impacting consumer demand [2][12]. - The **Midwest premium** for aluminium is currently around **68 cents/lb**, needing to rise to **70-75 cents/lb** to incentivize flows to the US [2][20]. - **US aluminium scrap imports** surged by **35%** from March to May compared to 2024, driven by high-quality scrap to support rolling mills [2][27]. - The **market share** of Canadian aluminium has dropped from **70%** in 2024 to **63%**, while the UAE's share increased from approximately **11%** to over **20%** [13][16]. - The **Midwest premium** is close to pricing in the **50% tariff**, indicating a potential increase in buying activity as US inventories are low [19][22]. Copper Insights - **US refined copper imports** have nearly tripled year-to-date from 2024 levels, primarily from seaborne sources, but have slowed recently due to impending tariffs [3][34]. - A **front-loading** of **400 kt** of refined copper has occurred, providing a buffer against the COMEX-LME spread, but semi-fabricated product imports have been slower [3][36]. - The **COMEX-LME spread** is expected to reach **40%** by Q4 2025 and **45%** by Q1 2026 as inventory buffers are reduced [4][71]. - **US copper scrap** continues to be priced for export, with the discount for no.2 scrap offsetting the COMEX premium, indicating limited domestic processing capacity [49][50]. Market Outlook - Limited further upside is anticipated for the **Midwest premium**, but there is potential for **LME aluminium prices** to rise as US buying improves and global scrap availability tightens [4][33]. - The **tariffs** on aluminium have made it less competitive compared to copper, prompting some US can producers to explore alternative materials [33]. - **Indonesia** and **Chile** are being discussed as potential sources for exemptions from tariffs, with Indonesia's refined copper production expected to grow significantly by 2026 [63][70]. Additional Considerations - The **US aluminium industry** would require an investment of approximately **$30 billion** and **6 GW** of energy to add **4 million tonnes** of smelting capacity domestically [31]. - The **implied grade** of US scrap exports has been declining, suggesting that higher-grade scrap is remaining in the US for domestic use [57][59]. - The **tariff exemptions** and their implications continue to create volatility in the market, particularly for aluminium and copper [71][72]. This summary encapsulates the critical insights and data points discussed during the conference call, providing a comprehensive overview of the current state and outlook of the aluminium and copper industries.

Investment Rating - The report maintains a positive stance on gold and copper, indicating potential investment opportunities in these sectors [7][10]. Core Insights - Copper is currently experiencing historical backwardation, with LME copper spot prices surpassing USD 10,000 per ton, driven by inventory depletion and redirection of shipments to the US [2]. - The Democratic Republic of Congo (DRC) has extended its cobalt export ban, which is expected to support cobalt prices in the near term [3][4]. - Aluminium output reached a new monthly high in May, supported by strong demand and improved smelter margins [5]. - Central banks are aggressively accumulating gold, with expectations for continued increases in official gold reserves over the next year [6]. Summary by Sections Copper - LME copper spot prices exceeded USD 10,000/t, with a backwardation of over USD 300/t for 3-month futures [2]. - Year-to-date inventory at LME has decreased by 180,000 tons, while COMEX inventory increased by 115,000 tons due to tariff concerns [2]. - Ivanhoe has reduced its 2025 copper production guidance by 28% [2]. Cobalt - DRC's cobalt export ban has been extended by three months, impacting supply and supporting price stability [3]. - Cobalt prices surged over 60% following the initial ban and are expected to remain strong due to continued restrictions [3]. Aluminium - Aluminium production in May rose approximately 5% year-on-year to 3.83 million tons, with a year-to-date increase of 4% [5]. - China's aluminium inventory dropped by around 400,000 tons over the past three months, indicating robust downstream demand [5]. Gold - Central banks have accumulated over 1,000 tons of gold annually, significantly higher than the average of 400-500 tons in the past decade [6]. - A survey indicates that 95% of central banks expect to continue increasing their gold reserves in the next 12 months [6]. Market Sentiment - Improved US-China trade talks have positively influenced market sentiment, particularly for base metals [10]. - Despite geopolitical uncertainties, the report suggests a preference for gold and copper investments among China materials [10].