2025-12-22 14:29Summary of Aluminum Industry Research Report Industry Overview - The report focuses on the aluminum industry in China, specifically tracking high-frequency demand trends and inventory levels from December 11 to December 17, 2025. The overall market expectation for demand recovery remains cautious [1]. Key Data Points Production - Total aluminum production in China was 857,000 tons (kt), remaining flat week-over-week (WoW) but showing a 3% increase year-over-year (YoY). Aluminum billet production was 362 kt, also flat WoW, with a 6% YoY increase [2]. - Year-to-date (YTD) aluminum production reached 43.1 million tons (mnt), up 2.8% YoY, while aluminum billet production totaled 17.6 mnt, up 6.1% YoY [2]. Inventory - As of December 18, 2025, total aluminum ingot and billet inventory was 844 kt, down 1% WoW but up 9% YoY. The inventory included 691 kt from social sources and 154 kt from producers, with respective changes of -2% and +8% WoW [3]. - Total aluminum ingot inventory was 614 kt, down 3% WoW and up 6% YoY, while aluminum billet inventory was 230 kt, up 7% WoW and 18% YoY [3]. Apparent Consumption - Overall aluminum apparent consumption in China was 894 kt during the week, down 2% WoW and 1% YoY. The apparent consumption of aluminum ingot and billet was 925 kt and 331 kt, respectively [4]. - YTD apparent consumption reached 44.4 mnt, reflecting a 4.1% YoY increase [4]. Core Insights - The report suggests that aluminum ingot and billet inventory data is more representative of overall aluminum demand, as it captures a broader range of inventory types. The total aluminum inventory decreased WoW, indicating a tighter supply compared to the same period in 2021, although it remains higher than in 2022-2024 [5]. - Apparent consumption levels were lower than in 2023 but higher than in 2022 and 2024 on the lunar calendar [7]. Investment Recommendations - Top picks in the aluminum sector include Hongqiao, Chalco H/A, Zijin Mining H/A, and CATL-A, reflecting a preference for companies with strong fundamentals and market positioning [1]. Risks - Key risks identified for the aluminum sector include: 1. Lower-than-expected aluminum and alumina prices [18][20]. 2. Higher-than-expected operational costs [18][20]. 3. Potential impairment losses [18][20]. 4. Changes in government policies regarding supply cuts if prices rise excessively [18][20]. Company Valuations - Chalco A-share: Target price set at RMB 14.77 per share, based on a price-to-book (PB) ratio of 2.93x for 2026E, reflecting expected higher aluminum margins due to decreasing raw material costs [17]. - Chalco H-share: Target price of HK$ 12.41 per share, based on a PB ratio of 2.28x for 2026E [19]. - CATL: Valued at RMB 571 per share, based on an EV/EBITDA multiple of 17.3x for 2026E [21]. - China Hongqiao: Target price of HK$ 36.00 per share, based on a PE ratio of 11.4x for 2026E [22]. - Zijin Mining: Target price of RMB 35.5 per share, based on a discounted cash flow (DCF) valuation [25]. Conclusion - The aluminum industry in China is experiencing cautious demand recovery, with production and consumption trends indicating a complex market environment. Investment opportunities exist, particularly in companies with strong fundamentals, but potential risks must be carefully monitored.