Aluminum prices have soared to multi-year highs recently, due in-part to production curbs in China amid growing demand with the resumption of industrial activities. The prices of aluminum stocks Aluminum Corporation of China (ACH), Alcoa Corporation (NYSE:AA), and Constellium (NYSE:CSTM) have slumped recently, but they could bounce back in the near term on their fundamental strength and rising aluminum prices. So, we think these stocks could be solid bets now. Let’s discuss. In addition to being essential to the construction industry, aluminum’s capacity to conduct heat and electricity makes it a popular choice for the electrical and electronics industries. While the demand for aluminum is rising with the reopening of industrial sectors worldwide, China, the world's biggest manufacturer of base metals, reduced its production to comply with its climate policies. As a result, aluminum prices rose to 13-year highs in September.
Earlier this month, aluminum prices reached $3,064 per ton on the London Metal Exchange, registering its highest price since July 2008. Furthermore, the aluminum market is expected to increase at a 5% CAGR between 2021-2026.
Given this backdrop, we think it could be profitable to scoop up fundamentally strong aluminum stocks Aluminum Corporation of China Limited (ACH), Alcoa Corporation (AA), and Constellium SE (CSTM), which have suffered price dips lately.