CHINA BASIC MATERIALS MONITOR November 2025: more signs of weaker demand Summary: End-user orderbooks remained lack luster on the ground, notably sequential deterioration in whitegoods, renewables and construction, beyond seasonality. Infrastructure further weakened with project start rates at multi-year low level, mostly due to challenged fundings from local government. The decelerating momentum from the trade-in program, high commodity prices, may also contribute to weaker demand in others. Auto remained ...

ab 21 November 2025 Global Research Mining Strategy On the Road: China trip feedback Global Basic Materials Lachlan Shaw 3 cities, 4.5 days, 29 meetings: What is the one liner? Stable with bullish read-throughs on lithium, aluminium and copper. We visited Beijing, Tangshan and Shanghai in early Nov-25 hosting 29 meetings with a range of contacts across key verticals. Conditions are overall stable. Property has weakened again (prices and volumes) since our May visit, while exports have proven more resilient ...

ab Global Research 17 November 2025 Copper Bullish outlook vs soft fundamentals near-term Remain structurally positive but short-term positioning elevated We have maintained a structurally positive view on copper through 2025, but were concerned a 'soft patch' in S&D fundamentals would weigh on the market in 3Q25 as elements of China demand softened after a strong 1H (renewables/appliances), some overhang from tariff pre-buying/US imports and resilient China smelter output. This fundamental thesis has broad ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the base metals industry, specifically copper and aluminium, with insights from Goldman Sachs analysts. Copper Market Insights - **Long-Term Price Forecast**: The long-term copper price is forecasted to reach $15,000 per ton by 2035, with a 2026 price forecast of $10,500 per ton, slightly below consensus due to a modest surplus in the near term [2][5][62]. - **Supply and Demand Dynamics**: A deficit in copper supply is expected to emerge later in the decade due to resource constraints and demand growth from critical sectors, which will drive prices higher [2][5]. - **Risks to Forecast**: The biggest risk to the $15,000 price forecast is unexpected growth in copper production from the Democratic Republic of Congo (DR Congo), which has historically exceeded market expectations [2][36]. - **Production Growth**: The forecast includes an additional 500,000 tons of production growth from DR Congo by 2035, but this is contingent on various geopolitical and economic factors [36][42]. - **Market Balance**: Current copper prices are seen as insufficient to balance the market over the next decade, necessitating a price of $15,000 per ton to maintain aging mines and incentivize new projects [5][61]. Aluminium Market Insights - **Price Forecast**: Aluminium prices are expected to decline to $2,350 per ton by Q4 2026 due to new supply entering the market, with a long-term forecast of $2,900 to $3,400 per ton from 2030 to 2035 [2][69]. - **Supply Constraints**: Unlike copper, aluminium does not face the same resource constraints, but power availability and financing are critical for new supply growth [6][71]. - **Regional Power Costs**: Power costs, which account for approximately 35% of operating costs for aluminium producers, are expected to influence supply growth, particularly in Europe and North America [6][69]. - **Investment in New Regions**: New aluminium production is anticipated to emerge in frontier jurisdictions such as Central Asia and Sub-Saharan Africa, driven by investments from Chinese firms [71][78]. Key Comparisons and Trade Recommendations - **Copper vs. Aluminium**: The copper-to-aluminium price ratio is projected to rise to 4.4:1 by 2035, compared to an average of 3.8:1 in 2025, indicating a stronger outlook for copper relative to aluminium [9][62]. - **Trade Strategy**: A trade recommendation has been opened for long positions in LME Dec-27 copper and short positions in LME Dec-27 aluminium, reflecting the differing price forecasts for the two metals [2][9]. Additional Insights - **Substitution Effects**: The report highlights the significant impact of substitution, particularly from copper to aluminium, which has been a consistent factor in the copper market [42][51]. - **Scrap Supply Limitations**: Historical overestimations of scrap supply growth have been noted, with capped post-consumer collection rates at around 75% [51][52]. - **Geopolitical Factors**: The US's involvement in DR Congo is expected to influence the pace of project development and production growth, potentially impacting global copper supply dynamics [36][42]. This summary encapsulates the critical insights and forecasts regarding the copper and aluminium markets as discussed in the conference call, providing a comprehensive overview of the current and future landscape of these industries.

19 November 2025 | 3:35PM AEDT Equity Research Global Metals & Mining: China M&M Field Trip: Strong steel exports & mill restocking to support Fe; Al/Cu/RE markets robust, Li improving We recently traveled to China with a group of international investors where we visited companies in Beijing, Shandong, Ningbo and Shanghai across the steel/iron ore, coal (metallurgical), copper, aluminium, rare earths, lithium, equipment, property and construction sectors. We came away from the trip with the following conclu ...

Core Viewpoint - China Hongqiao Group, the largest private aluminium producer in China, is planning to raise HK$11.68 billion (US$1.5 billion) through a share sale to fund projects and repay debt, leveraging strong industry margins and a favorable Hong Kong equity market [1][2]. Group 1: Fundraising Details - The company intends to sell up to 400 million existing shares at HK$29.20 each, which is a 9.6% discount to its closing price on Monday [1]. - The placed shares will represent approximately 4% of China Hongqiao's enlarged share capital [4]. - The offer price is nearly 2.2% higher than the average closing price of around HK$28.58 per share over the past 30 trading days [4]. Group 2: Market Conditions - Aluminium prices are currently near a three-year high due to solid demand and controlled supply [4][5]. - Analysts expect tight supply conditions to persist, benefiting from China's capacity cap policy and limited capacity additions in Indonesia, which will support higher aluminium margins [5]. Group 3: Analyst Insights - Citigroup has raised China Hongqiao's 12-month target price to HK$36 from HK$25.20, citing improved margins, superior profitability, and an attractive shareholder return policy [6]. - The management's cautious approach towards the company's expansion projects in Indonesia is noted as a positive factor [6].

Summary of Aluminium Industry Conference Call Industry Overview - The aluminium industry is facing a significant shift as China's aluminium production reaches its capacity cap of 45 million tonnes per annum (mtpa), limiting further growth and creating better conditions for smelter margins [2][14][10] - Supply outages in Europe and increasing power demands from other sectors, particularly AI, are complicating the operational landscape for aluminium smelters [3][24][10] Key Points Supply Dynamics - China's aluminium output is currently at 45.2 million tonnes year-to-date, indicating limited room for further growth [14][16] - Net exports from China have decreased by approximately 700,000 tonnes year-to-date, contributing to a tighter market [2][14] - Indonesia's aluminium output is projected to grow significantly, with estimates suggesting an increase from around 500,000 tonnes in 2024 to 3.6 million tonnes by 2030, but this growth may not be sufficient to offset the overall market deficit [39][41] Market Deficit Projections - The aluminium market is expected to be in a deficit in 2026, with projections indicating a shortfall of 600,000 tonnes, which could increase to nearly 800,000 tonnes when factoring in outages from Century's Iceland smelter [58][62] - The potential shutdown of the Mozal smelter in March 2026 adds to the risk of a larger deficit [11][34] Price Outlook - Aluminium prices are forecasted to average $2,750 per tonne in 2026, above the consensus estimate of $2,620 per tonne, with potential for prices to breach $3,000 per tonne under current market conditions [5][62][63] - A bullish scenario could see prices rise to $3,300 per tonne, contingent on further supply disruptions [5][63] Power Supply Challenges - Aluminium smelting is highly electricity-intensive, requiring 14-16 MWh per tonne, which is increasingly competing with rising power demands from AI and other sectors [3][24] - Smelters are struggling to secure long-term power contracts at competitive rates, with the US Aluminium Association indicating a need for contracts around $40/MWh, while some tech companies are securing contracts at $100+/MWh [3][24][33] Regional Insights - In Europe, the restart of idled smelting capacity is becoming more challenging, with significant risks that some capacity may remain offline due to difficulties in securing power contracts [25][29] - The US market has seen limited restarts of idled capacity despite high premiums, with only Century Aluminium announcing a partial restart [31][37] Demand Trends - China's aluminium demand is projected to rise by 3% in 2025, driven by investments in grid infrastructure, solar installations, and electric vehicles, but growth is expected to slow to 2% in 2026 [47][48] - The slowdown in solar installations, which currently account for about 10% of China's aluminium demand, poses a risk to future demand growth [48] Additional Insights - The competition for electricity and the challenges in securing long-term contracts are critical factors that could impact the operational viability of smelters globally [3][24] - The aluminium market's historical tendency to trade close to its cost curve may change as supply tightens, potentially leading to improved smelter margins [15][62] This summary encapsulates the key insights and projections regarding the aluminium industry as discussed in the conference call, highlighting the interplay between supply constraints, demand trends, and pricing dynamics.

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: The conference call primarily discusses the metals and materials industry, with a particular emphasis on aluminium, copper, gold, and construction materials [2][3][4][9]. Core Insights and Arguments - **Resilient Metals Demand**: Despite various challenges, metals demand has remained strong, driven by front-loading shipments to the US and increasing demand from sectors such as renewable energy, electric vehicles (EVs), and AI data centers [2][9]. - **Supply Disruptions Impacting Aluminium**: Aluminium prices have increased by 8% month-on-month due to robust demand and supply disruptions, including partial output disruptions at Century Aluminum's smelter in Iceland and potential power supply issues at South32's Mozal smelter in Mozambique [3][9]. - **China's Production Ceiling**: China's production ceiling of 45 million tonnes for aluminium, combined with low inventories and strong investments in the grid and EV demand, supports a positive outlook for aluminium [3][6]. - **Gold ETF Inflows**: Gold ETFs saw record inflows of USD 8.7 billion in the week ending October 22, leading to a rally in gold prices, although prices have since moderated due to profit booking [5][9]. - **Long-term Outlook for Construction Materials**: While the current demand for construction materials is lukewarm, the long-term outlook remains positive, contingent on the execution of supply-side reforms and earnings improvements [6][9]. Additional Important Insights - **China's 15th Five-Year Plan**: The plan emphasizes upgrading traditional industries and accelerating developments in new sectors, which may lead to policy changes aimed at tackling excess supply and boosting demand [4][9]. - **Price Forecast Adjustments**: Recent adjustments to price forecasts for metals reflect current market fundamentals, with copper and cobalt receiving the most significant upgrades due to supply disruptions [2][9]. - **Commodity Price Trends**: The report includes detailed commodity price trends, showing fluctuations in prices for various metals, including copper, aluminium, and gold, with specific percentage changes over different time frames [10][11]. Conclusion - The conference call highlights a complex landscape for the metals and materials industry, characterized by resilient demand, significant supply disruptions, and evolving policy frameworks in China. The focus on aluminium as a preferred investment reflects the current market dynamics and future potential in the sector [6][9].

Core Viewpoint - Rio Tinto is considering the possibility of ceasing operations at its Tomago aluminium smelter in New South Wales upon the expiration of its current electricity supply contract [1] Company Summary - The Tomago aluminium smelter is located in New South Wales and is operated by Rio Tinto [1] - The decision to potentially cease operations is linked to the end of the current electricity supply contract [1]

Core Insights - Vedanta Resources Ltd has successfully raised 500 million dollars through bond issuance to repay near-term obligations and enhance its capital structure [1][2] Financial Position - The company has reduced its total gross debt from 9.1 billion dollars in fiscal 2022 to 4.8 billion dollars as of June 2025, indicating a significant reduction of over 4 billion dollars [6] - The average maturity of the debt portfolio is now over four years, and the weighted average interest cost has been reduced to single digits [1][6] - Vedanta has a long-term loan facility with undrawn balances of 682 million dollars, ensuring robust liquidity [3] Operational Performance - Core businesses, including zinc, oil and gas, aluminium, and power, continue to deliver strong EBITDA and cash flows [3] - Commodity prices have remained resilient, supporting the company's profitability despite global trade disruptions [4] Strategic Initiatives - The ongoing demerger of Vedanta Limited into five independent sector-specific entities aims to unlock value, enhance transparency, and enable sharper capital allocation [4] - The company is committed to financial discipline, focusing on honoring all debt obligations and sustaining its deleveraging trajectory through internal accruals and strategic refinancing [5] Liquidity and Capital Structure - Vedanta maintains robust liquidity supported by dividend inflows from operating subsidiaries and healthy free cash generation [2][3] - The company has diversified its credit profile through a mix of bonds and bank loans, adding new banks to its capital structure [7]