Orient Securities released a research report stating that due to the rapid expansion of AI-driven data center construction in the U.S. and rising global energy prices, power supply-demand gaps in major overseas economies are widening, further increasing industrial electricity costs. As a physical carrier of electricity, aluminum production is expected to see significant growth driven by export demand. China's aluminum industry, whether coal-fired or hydro-powered, is likely to maintain cost advantages in the medium term, warranting a reassessment of its competitive edge. Additionally, mid-term solutions such as energy storage and nuclear fusion, where China holds unique advantages, are worth monitoring, along with investment opportunities in specialty steel companies supplying critical materials for these sectors.

**Key Views from Orient Securities:**

**Aluminum Sector:** Overseas power shortages are fueling strong expectations of production cuts, potentially leading to a reassessment of China's industry advantages. According to EIA data, the U.S. imported a net 20.94 terawatt-hours of electricity in the first nine months of 2025, up 125% year-on-year, reflecting a widening domestic power deficit. U.S. industrial electricity prices reached 9.06 cents/kWh in August, nearing the record high of 9.38 cents/kWh in August 2022, signaling escalating supply risks. Power shortages have already forced production cuts at aluminum plants in the U.S., Africa, and Australia. With global average industrial electricity prices at $0.16/kWh, further increases could surpass 2022 Q3 levels, potentially impacting output in Australia, the U.S., Malaysia, Brazil, and India (2024 production: 1.5M, 0.67M, 0.87M, 1.1M, and 4.2M tons, respectively). China’s aluminum industry, benefiting from stable coal and hydropower costs, remains well-positioned for medium-term advantages.

**Specialty Steel & New Materials Sector:** Rising interest in controlled nuclear fusion highlights investment opportunities in critical material suppliers. China leads in nuclear technology, with milestones including the installation of the BEST tokamak base in Hefei—potentially the world’s first fusion power device—and the operational launch of a thorium-based molten salt reactor, the only one of its kind globally. Breakthroughs in nuclear fission and fusion are boosting demand for specialty steels capable of withstanding extreme temperatures, radiation, and corrosion, creating growth opportunities for key suppliers.

**Lithium Carbonate Sector:** Surging overseas energy storage demand is driving a rebound in lithium prices. Power shortages at data centers have spurred mid-term demand for energy storage, lifting lithium carbonate prices across the supply chain. On November 6, lithium hexafluorophosphate hit a two-year high of ¥119,800/ton, up ¥13,500 week-on-week, pushing lithium carbonate to ¥80,200/ton on November 7. Major supply agreements, such as Tinci Materials’ contracts with Gotion High-Tech and CALB for 870K and 725K tons of electrolyte products (2026–2028), signal sustained price and volume growth.

**Investment Recommendations:** - **Aluminum Sector:** Focus on Tianshan Aluminum (002532.SZ), which may see volume-price growth in 2026, alongside Yunnan Aluminum (000807.SZ) and Zhongfu Industrial (600595.SH). - **Specialty Steel:** Jiuli Special Materials (002318.SZ) and Fushun Special Steel (600399.SH), key suppliers for next-gen nuclear reactors; also TIANGONG INT'L (00826). - **Lithium Carbonate:** Yongxing Materials (002756.SZ) and Sinomine Resource (002738.SZ).

**Risks:** Economic slowdown, tariff impacts on demand/supply chains, raw material price volatility, and U.S.-China relations.