Shares of CHALCO (HKEX: 02600) have dropped more than 8%. At the time of writing, the stock is down 8.33% to HK$9.47, with a turnover of HK$1.329 billion.

Catalyst for the Decline

The sharp decline follows a research report from Goldman Sachs. The report indicates that recent industry discussions suggest aluminum supply growth, both within China and internationally, is accelerating, driven by strong industry profits. The bank forecasts that China's aluminum production capacity will exceed 48 million tonnes by the end of 2026.

Price and Profit Forecast

Consequently, Goldman Sachs expects the price spread on the Shanghai Futures Exchange to correct from RMB 8,879 per tonne in the first half of 2026 to RMB 4,250 per tonne by 2027. This adjustment is projected to lead to a 50% decline in CHALCO's recurring profit for the year 2027.

Rating and Target Price Action

In light of these projections, Goldman Sachs has downgraded its rating on CHALCO to "Sell" and reduced its 12-month target price to HK$7.5.