Morgan Stanley just boosted its outlook for aluminium. Here’s which ASX shares have exposure

Analysts at Morgan Stanley have lifted their long-term outlook for the aluminium price.

ASX shares with exposure to aluminium include Alumina Limited (ASX: AWC) and Rio Tinto Limited (ASX: RIO), South32 Ltd (ASX: S32) and Capral Limited (ASX: CAA).

Let’s take a look in more detail at the outlook for aluminium.

Improved aluminium outlook

Aluminium is a lightweight silver metal used in transportation, construction, power lines, electric vehicles and consumer goods.

Morgan Stanley has improved its aluminium price prediction for the long term, according to The Australian.

The broker has lifted its forecast for aluminium by 17% to US$2,525 per tonne. Analysts said:

Our new bottom-up modelling suggests 2030 copper and aluminium demand could be 24 per cent and 26 per cent higher than current levels.

On a 6-12 month view, we prefer aluminium, but on a medium-term view, we think the copper thesis looks more robust

The aluminium price climbed 1.6% to US$2308 per tonne overnight. Explaining this movement in a research note today, ANZ Australian economics head David Plank said “aluminium gained amid speculation of wide cuts to Chinese output”. He added:

Some aluminium smelters in Yunnan may cut capacity by 20-30%, according to Shanghai Metals Market.

That follows orders from the local electricity authority to cut 10% of production since the weekend. This is added to supply issues in Europe, where soaring energy costs are
forcing smelter closures.

Rio Tinto is a major global aluminium producer. South32 is an aluminium producer with operations in South America, Australia and South Africa. Capral is a major Australian aluminium manufacturer and distributor. Alumina has a 40% stake in Alcoa World Alumina and Chemicals (AWAC).

Rio Tinto achieved gross product sales of US$7.796 billion from aluminium in FY22. The company achieved an average realised aluminium price of US$3,808 per tonne, 45% higher than the previous financial year.

Share price snapshot

The Alumina share price is down 23% year to date, while South32 shares have shed 3%. Rio Tinto shares have lost 8% year to date, while the Capral share price has fallen 18%.

For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has slid 6% year to date.

The post Morgan Stanley just boosted its outlook for aluminium. Here’s which ASX shares have exposure appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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