Everbright Securities released a research report stating that on December 29, 2025, the copper-aluminum price ratio reached 4.49, marking its highest level since 2003, which is expected to accelerate aluminum-for-copper substitution in certain sectors. On the supply side, new project progress in overseas regions like Indonesia may continue to be hampered by issues such as power supply bottlenecks, lengthy approval cycles, inadequate infrastructure, and foreign investment restrictions, potentially leading to slower-than-expected supply expansion. Regarding imports, Guinea is China's largest bauxite supplier; although the bauxite supply-demand balance remains relatively loose, if market speculation arises that Guinea might implement price-supporting control policies, alumina prices could react in advance. The main views of Everbright Securities are as follows.

The copper-aluminum price ratio briefly hit 4.5, reaching its highest level since 2003, which is expected to accelerate aluminum-for-copper substitution in certain sectors. For instance, in the wire and cable industry, according to SMM's view, aluminum poses a significant substitution threat to copper due to its clear price advantage, good physical properties, and abundant reserves. According to a First Financial report, at the 2025 China Home Appliance Technology Annual Conference, the China Association of Refrigeration's group standard "Construction Specification for Production Lines of Aluminum Tube-Fin Heat Exchangers for Room Air Conditioners" was released, and two other group standards concerning technical requirements for raw materials of aluminum heat exchangers and construction specifications for production lines of flying-wing heat exchangers are being drafted. Furthermore, the national standard "Heat Exchangers for Room Air Conditioners" related to "aluminum-for-copper" substitution is also under revision.

Overseas primary aluminum supply faces disruptions, and short-term capacity expansion remains limited. On October 22, 2025, a production line at Century Aluminum's Iceland facility was temporarily shut down due to equipment failure; it is estimated that this incident will reduce operational capacity from 317,000 tonnes per year to 105,700 tonnes per year. On December 16, 2025, South32 provided an update on its Mozal aluminum smelter (with an approximate capacity of 600,000 tonnes per year), stating that the plant will enter a care and maintenance phase around March 15, 2026, as a power supply agreement has not yet been reached. New project progress in overseas regions like Indonesia may continue to be constrained by power supply bottlenecks, approval cycles, infrastructure deficiencies, and foreign investment restrictions, potentially resulting in supply releases falling short of expectations.

Amid the transformation from old to new growth drivers and the rise of emerging sectors, aluminum consumption is expected to remain resilient in 2026. Based on Aladdiny's breakdown of China's aluminum consumption structure, the shares for transportation and power applications increased from 19.7% and 15.0% in 2023 to 23.85% and 16.27% in 2025, respectively. Demand from the "new three" sectors—new energy vehicles, photovoltaics, and battery foil—is offsetting part of the decline in real estate demand, significantly reducing the correlation between aluminum prices and the year-on-year cumulative growth of real estate completion area. Driven by the AI wave, emerging fields such as energy storage and data centers are also expected to contribute new growth points for primary aluminum consumption. According to Aladdiny's estimates, China's aluminum consumption for data centers reached approximately 106,000 tonnes in 2025, while newly added aluminum usage for energy storage was between 208,000 and 288,000 tonnes. It is projected that China's total aluminum consumption will reach 57.3655 million tonnes in 2026, maintaining a year-on-year growth rate of over 1.7%.

Policy expectations exist both domestically and internationally, gradually solidifying the bottom for alumina prices. On December 26, 2025, the Department of Industrial Development of the National Development and Reform Commission published an article titled "Vigorously Promoting the Optimization and Upgrading of Traditional Industries," which mentioned: "For resource-intensive industries like alumina and copper smelting, the key lies in strengthening management and optimizing layout. Improve the demonstration mechanism for major projects, encourage local authorities to proactively align with national industrial regulation requirements before project demonstration to prevent blind investment and disorderly construction. Encourage large backbone enterprises to implement mergers and reorganizations to enhance scale and group-level operations, thereby improving industrial competitiveness." This has reinforced expectations of anti-involution measures in the alumina sector. According to Everbright Securities' calculations, China's external dependency on bauxite was 73% in 2024 and 79% for the period from January to November 2025. Guinea is China's largest bauxite import source, accounting for 69.4% of total imports in 2024 and 74.1% from January to November 2025. According to Aladdiny, long-term contract offers from major Guinean miners for the first quarter of 2026 are at $66.5 per dry tonne (FOB + freight), which has already fallen below the CIF cash cost for some Guinean mining areas. Although the bauxite supply-demand balance remains relatively loose, if market participants speculate that Guinea might introduce control policies to support prices, alumina prices could react in advance.

Regarding investment targets, it is recommended to focus on companies likely to benefit from expanding per-ton aluminum profits, such as Zhongfu Industrial (600595.SH), Yunnan Aluminium (000807.SZ), and Shenhuo Group (000933.SZ); and companies poised to benefit from potential alumina price rebounds and high dividend expectations, such as Aluminum Corporation of China (CHALCO) (601600.SH, 02600), Nanshan Aluminium (600219.SH), Tianshan Aluminum (002532.SZ), and China Hongqiao (01378).

Risks include overseas supply expansion progressing faster than expected and weaker-than-anticipated downstream demand.