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<Research>UBS: Mideast Supply Risk Elevates Aluminum & Thermal Coal Prices; 2026 Forecasts Raised by 13%/ 10%
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The tense situation in the Middle East made aluminum and coal stocks brisk today (12th), with CHALCO (02600.HK) leaping 4.4%. CHINAHONGQIAO (01378.HK) ballooned 3.8%, while RUSAL (00486.HK) mounted 3.9%. CHUANGXIN IND (02788.HK) even rallied 9.5%. Moreover, CHINA COAL (01898.HK) advanced 5.1%, while YANKUANG ENERGY (01171.HK) hyped up 8.8%. YANCOAL AUS (03668.HK) elevated 5.1%. UBS issued a research report saying that recent supply risks in the Middle East elevated international aluminum and thermal coal prices, and that following oil and natural gas, aluminum and thermal coal are the commodities most affected by the Middle East conflict. Thermal coal is supported by the substitution effect of switching from natural gas to coal, with the energy price risk premium likely to persist in the short term, driving coal prices higher, the broker noted. As for aluminum, supply disruptions in the Middle East and higher energy costs lifted the cost curve. Approximately 650,000 tons of aluminum supply have already been interrupted, and if shipping through the Strait of Hormuz is blocked for several weeks, it could lead to the shutdown of about 4 million tons of smelting capacity, increasing short-term upside risks for aluminum price. UBS raised its 2026 LME aluminum price forecast by 13% to around US$3,250 per ton, while maintaining its 2027 forecast at US$3,300 per ton. In the European and American markets, Middle Eastern supply accounts for about a quarter of imports, and any disruption would raise aluminum premiums in these regions. Regarding thermal coal, since the outbreak of the Iran conflict, European natural gas prices have risen by about 50%, Brent crude oil prices have increased by about 30%, and NEWC thermal coal prices have risen by about 15%. The high natural gas prices support coal prices. The broker raised its 2026 NEWC thermal coal price forecast by 10% to US$126 per ton from US$115 per ton. AASTOCKS Financial News Website: www.aastocks.com |
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