中国材料行业 - 铝：需求与供给好于预期-China Materials-Aluminium Better-than-expected Demand and Supply

Summary of Aluminum Industry Conference Call Industry Overview - The aluminum outlook has improved significantly due to better-than-expected demand from Energy Storage Systems (ESS) and supply challenges related to power issues [1][2][3] - The aluminum industry is experiencing a material growth in demand, particularly from ESS and consumer electronics [2] Key Demand Insights - ESS consumption of aluminum has increased from 25% of total batteries in China in June to over 40% [2] - For 2025, it is estimated that approximately 960kt of aluminum (+71.4% YoY) will be consumed by ESS, with a further 1.44mt expected in 2026 [2][34] - Overall aluminum demand in China is projected to grow by more than 2% in 2026, despite a decline in demand from traditional sectors [35] Supply Challenges - Global aluminum production is expected to face challenges, with only about 1.4mnt of new supply anticipated in 2026 [3][31] - Indonesia is emerging as a key supplier, but power supply constraints are limiting production growth [11][19] - Current aluminum inventory in China is low at 600kt, which is below historical levels [4] Price and Stock Implications - The analysis indicates that Chalco's and Hongqiao's shares imply aluminum prices of Rmb16.7k/t and Rmb18.8k/t, respectively [5] - Price targets for Chalco, Hongqiao, and Shenhuo have been updated based on a more optimistic earnings outlook, with Hongqiao being the top pick due to better earnings delivery and higher dividend yield [5][44] Earnings Estimates - EPS estimates for Chalco have been raised by 8% for 2025, 38% for 2026, and 30% for 2027 due to higher margin contributions from aluminum smelting [36] - Hongqiao's EPS estimates have increased by 5% for 2025, 23% for 2026, and 29% for 2027 [44] - Shenhuo's EPS estimates have been raised by 4% for 2025, 20% for 2026, and 31% for 2027 [51] Regulatory Environment - China's government continues to enforce a cap on aluminum production capacity, which is unlikely to be lifted in the near term [21][24] - The government is promoting the development of a secondary aluminum industry to support carbon reduction goals [25] Conclusion - The aluminum industry is poised for growth driven by ESS demand, but faces significant supply constraints and regulatory challenges. The outlook for key players like Chalco, Hongqiao, and Shenhuo remains positive, supported by improved earnings estimates and favorable market conditions [1][5][36][44][51]