Everbright Securities: Aluminum-copper is positively bullish on aluminum prices compared to repairing and superimposing supply disturbances

The Zhitong Finance App learned that Everbright Securities released a research report saying that on December 29, 2025, the copper-aluminum price ratio reached 4.49. This value hit a new high since 2003, and the replacement of aluminum for copper is expected to accelerate in some fields. On the supply side, overseas regions such as Indonesia may still be constrained by problems such as electricity supply bottlenecks, approval cycles, insufficient infrastructure, and foreign investment restrictions, which have affected the progress of new investment projects, resulting in supply releases falling short of expectations. On the import side, Guinea is the largest domestic bauxite importer, even though the bauxite supply and demand pattern is still relaxed. If the market continues to compete, alumina prices may respond early.

The main views of Everbright Securities are as follows:

The price ratio of copper to aluminum once reached 4.5, a new high since 2003, and aluminum substitutes for copper are expected to accelerate in some fields

On December 29, 2025, the copper-aluminum price ratio reached 4.49. This value hit a new high since 2003, and is expected to accelerate in some fields: for example, in the wire and cable industry, according to SMM views, with obvious price advantages and good physical properties and abundant reserves, aluminum poses an obvious alternative threat to copper; according to the First Financial Report, at the 2025 China Home Appliance Technology Annual Conference, the China Refrigeration Society Group Standard “Specification for the Construction of Aluminum Tubefin Heat Exchangers Production Line for Room Air Conditioners” has been released. Group standards for production line construction regulations are being prepared. In addition, the national standard “Heat Exchangers for Room Air Conditioners” related to “aluminum instead of copper” is also being revised.

Overseas electrolytic aluminum supply is disrupted, and new production capacity expansion is still limited in the short term

On October 22, 2025, Century Aluminum's production line in Iceland was temporarily shut down due to a fault. It is expected that the operating capacity will drop from 317,000 tons/year to 105,700 tons/year due to this equipment failure. On December 16, 2025, South32 released the latest news on the Mozal Aluminum Plant (production capacity is about 600,000 tons/year). Since a power supply agreement has not been reached, the plant will enter a maintenance state around March 15, 2026. Overseas regions such as Indonesia may still be constrained by issues such as power supply bottlenecks, approval cycles, insufficient infrastructure, and foreign investment restrictions, which affect the progress of new investment projects, resulting in supply releases falling short of expectations.

With the transformation of old and new kinetic energy and the rise of emerging sectors, aluminum consumption will remain resilient in 2026

According to Aladdin's domestic aluminum consumption structure, aluminum for transportation and electricity rose from 19.7% and 15.0% in 2023 to 23.85% and 16.27% in 2025, respectively. Demand for the “new three” products, such as new energy vehicles, photovoltaics, and battery foil, hedged the decline in demand for some real estate, and the correlation between aluminum prices and the total completed real estate area decreased significantly year-on-year. Driven by the AI wave, emerging fields such as energy storage and data centers are also expected to contribute new growth points in electrolytic aluminum consumption. According to Aladdin's estimates, domestic data center aluminum consumption in 2025 will be about 106,000 tons, and additional aluminum usage for energy storage will be 208-288,000 tons. The total domestic aluminum consumption is expected to be 57.365,500 tons in 2026, with a year-on-year increase of more than 1.7%.

There are policy expectations at home and abroad, and the bottom of alumina prices is gradually consolidating

On December 26, 2025, the Industrial Development Department of the National Development and Reform Commission published the article “Vigorously Promoting the Optimization and Upgrading of Traditional Industries”, which mentions: “The key to resource-constrained industries such as alumina and copper smelting is to strengthen management and optimize layout. Improve verification mechanisms for major projects, promote local initiatives to meet national industrial regulation requirements before verification, and prevent blind investment and disorderly construction. “Encourage large key enterprises to implement mergers and restructuring, raise the level of scale and groupings, and enhance industrial competitiveness”, and expectations for alumina's anti-internal roll have been strengthened once again.

According to estimates by Everbright Securities, China's external dependence on bauxite was 73% and 79% from January to November 2025, respectively. Guinea is the largest domestic bauxite importer. In 2024 and January-November 2025, China's bauxite imports from Guinea accounted for 69.4% and 74.1% of total imports, respectively. According to Aladdin, a large Guinean mining company quoted 66.5 US dollars/dry ton (offshore+sea freight) for the first quarter of 2026, which has already broken through the CIF cash costs of individual mining areas in Guinea. Although the bauxite supply and demand pattern is still relaxed, if the market continues to compete and Guinea introduces control policies to raise prices, alumina prices may respond early.

Aspect of the target

It is recommended to focus on Zhongfu Industrial (600595.SH), Yunlu (000807.SZ), and Shenhuo (000933.SZ), whose profits are expanding; China Aluminum (601600.SH,02600), Nanshan Aluminum (600219.SH), Tianshan Aluminum (), Tianshan Aluminum (002532.SZ), China Hongqiao (01378), etc., considering the rebound in alumina prices and high dividend expectations.

Risk Alerts

Overseas supply release progress is higher than expected; downstream demand falls short of expected risks, etc.