Aluminum Stocks Extend Gains as JPMorgan Warns of Tight Global Supply

Aluminum stocks continued their upward trajectory in Hong Kong trading. At the time of writing, CHALCO (02600) rose 4.37% to HK$13.13, RUSAL (00486) gained 2.61% to HK$4.33, CHINAHONGQIAO (01378) advanced 2.56% to HK$39.22, and CHUANGXIN IND (02788) increased 2.27% to HK$31.6.

The rally comes amid ongoing supply constraints in the Middle East's aluminum sector. While tensions between the US and Iran have entered a negotiation phase, raw material supplies for the regional aluminum industry remain constrained due to the blockade of the Strait of Hormuz. Production lines that have been idled are unlikely to resume operations in the near term.

Substantial output reductions have been implemented by Qatar Aluminum and Bahrain's aluminum producer, while facilities operated by UAE's EGA and Bahrain's smelter have suffered damage from recent attacks.

JPMorgan highlighted in a research report that global visible aluminum inventories have dwindled to just 1.9 million metric tons, equivalent to only nine days of consumption. This compares with inventory levels covering 20 days of demand at the beginning of 2021.

The investment bank anticipates that LME aluminum prices will break through $4,000 per metric ton in the coming months, with expectations of reaching $3,800 per ton in the second quarter and averaging $3,500 per ton for the full year. Currently, LME aluminum is trading around $3,500 per ton.