20260813-招银国际-Aluminium_-_Upside_risk_to_our_supply_forecast_following_the_resumption_of_EGA_production_2页_676kb

Document Summary: Aluminium Supply Forecast and Market Outlook

Core Content

This document provides an update on the recovery of the Emirates Global Aluminium (EGA) smelter in Abu Dhabi, which was significantly damaged by Iran's missile and drone attacks in March 2026. The key focus is on the implications of this recovery for global aluminium supply forecasts and the subsequent market outlook.

Main Points

• Resumption of EGA Production: EGA has announced plans to restore the Al Taweelah smelter to its pre-incident production level of 1.5 million tonnes per annum (mtpa) by early 2027, which is earlier than the previously estimated late 2027 timeline.

• Progress on Recovery: As of 10 August 2026, 18% of the reduction cells have been restarted. The production is expected to gradually increase as more cells are brought back online, reaching the pre-incident level in the first quarter of 2027 (1Q27).

• Supply Impact: The resumption of EGA production is expected to add an additional 2% to the global supply forecast for 2027, which was previously assumed to grow by 3% year-over-year (YoY). This increase could ease the tight supply and demand balance in the aluminium market.

• Recovery Dependency: The recovery timeline is dependent on the re-opening of the Strait of Hormuz, which remains a critical route for aluminium exports. However, EGA is developing alternative corridors, which may reduce long-term reliance on the Strait.

• Market Outlook: Given the positive supply development, the document suggests that there may be a lack of positive catalysts for aluminium stocks in the near term. It advises investors to stay on the sidelines until further developments are clear.

Key Information

• Company Involved: Emirates Global Aluminium (EGA), a major player in the global aluminium market.
• Location: Al Taweelah smelter in Abu Dhabi.
• Capacity: 1.5 mtpa.
• Damage Timeline: March 2026 due to Iran's attacks.
• Supply Forecast Adjustment: Previously estimated 3% YoY growth in 2027E; now potential 2% increase due to EGA's resumption.
• Investment Recommendation: The document recommends an "OUTPERFORM" rating for the China materials sector, suggesting the industry is expected to outperform the broad market benchmark over the next 12 months.
• Analysts: Wayne Fung, CFA, and Jake Zhang are the primary analysts responsible for the report.

Important Disclosures

• The report is not an offer or solicitation to buy or sell securities.
• CMBIGM does not provide individually tailored investment advice.
• The information is based on publicly available data and is not guaranteed for accuracy or completeness.
• The report may be subject to change without notice.
• There may be conflicts of interest due to CMBIGM's potential involvement in investment banking or other business relationships with the companies mentioned.

Legal and Distribution Notes

• The report is intended for specific recipients in different regions, including the UK, US, and Singapore, with restrictions on distribution.
• In the US, the report is only for "major US institutional investors" and must not be shared with others.
• In Singapore, CMBISG distributes the report and is legally responsible for its content to non-accredited investors only to the extent required by law.

Conclusion

The resumption of EGA production is a positive development that may affect global aluminium supply dynamics. However, the market may not react strongly in the short term due to the already priced-in concerns. Investors are advised to remain cautious and avoid active trading until more clarity is provided.