Aluminum Targeting Over $3000... "Related Stocks Continue to Rise"

China's Decarbonization Policy and Surging Demand
Price Increase Continues Due to Supply-Demand Imbalance

Impact of Indonesia's Bauxite Export Suspension

Aluminum billet appearance of Standard Perm

[Asia Economy Reporter Minji Lee] Aluminum prices are soaring due to supply-demand imbalances caused by the absence of supply from major producing countries and concerns over rising raw material costs. In the domestic stock market, investment sentiment appears to be expanding around companies that use aluminum to produce key materials for secondary batteries.

According to the Korea Exchange on the 15th, Joil Aluminum has risen 22% since the beginning of this month until the day before. Although it fell about 4% due to profit-taking sales the previous day, it still records a high rate of increase. The announcement of a supply contract for aluminum cathode foil materials for secondary batteries acted as a positive factor, and the rising aluminum prices drove the stock price increase. Sama Aluminum and Dongwon Systems, which supply aluminum products, rose about 8% and 7%, respectively, during the same period, showing an upward trend. This reflects expectations that if the rise in aluminum prices leads to higher selling prices, earnings could improve significantly.

As of local time on the 13th, aluminum is priced at $2,946 on the London Metal Exchange (LME). Aluminum prices reached an all-time high in 10 years at $3,200 per ton in October last year, then declined and seemed to stabilize around the $2,500 level. However, since last month, prices have been rising again, and this month they are attempting to break through the $3,000 mark once more.

The biggest factor influencing the rise in aluminum prices is China’s decarbonization policy. Aluminum is obtained by electrolyzing alumina, which is refined from the raw material bauxite. Since electricity accounts for about 40% of production costs, and China generates electricity mainly from coal power, the aluminum industry is inevitably a regulated sector. As China, which accounts for 50% of global aluminum production, reduced aluminum supply, a sharp price increase due to supply-demand instability occurred. Additionally, as aluminum has been recognized as a ‘green metal’ (an eco-friendly metal used in electric vehicles, solar power facilities, etc.), demand forecasts have been positive, tightening supply even further.

Indonesia’s decision to halt bauxite exports also pushed aluminum prices higher. Indonesia accounts for only 5-6% of the bauxite production market, so the impact on the aluminum market is limited. However, concerns that raw material supply restrictions could further increase aluminum prices made the price rise steeper. Hwang Byung-jin, a researcher at NH Investment & Securities, said, “Indonesia’s policy to restrict raw material exports to move beyond being a simple raw material exporter and enter refining has been anticipated since the enactment of the 2009 Mining Law. Although Malaysia, Australia, and Russia have large bauxite markets, so supply chain concerns are not significant, it has affected market sentiment.”

Securities experts believe that the upward trend in aluminum prices will not subside in the short term. This is because China’s decarbonization policy is expected to maintain unstable supply and demand. According to China’s National Bureau of Statistics, aluminum production in China in November decreased by 1.8% compared to the same month last year, marking the third consecutive month of decline compared to the previous year.

This content was produced with the assistance of AI translation services.