Nanshan Aluminium International Holdings, backed by commodities giant Glencore, faced a muted debut on the Hong Kong Stock Exchange, reflecting broader concerns over declining alumina prices.
Shares of the Southeast Asian alumina producer opened by climbing as much as 1.1 per cent in early trading but later retreated, slipping 1 per cent to HK$26.35 apiece by 10:27 a.m. local time. The company, a subsidiary of China’s Nanshan Group, intends to utilise the IPO proceeds for production expansion in Indonesia and general corporate purposes.
Alumina prices soared to record highs in 2024, more than doubling amid supply chain disruptions from Jamaica to Guinea, Australia, and China. However, a surge in new production capacity has since triggered a sharp price correction, dampening investor sentiment toward the sector.
Indonesia’s alumina industry is poised for significant growth this year, driven by the country’s bauxite export ban from June 2023. In response, Chinese companies have invested in alumina refineries in Indonesia to diversify their supply chains beyond Guinea, a major producer.
However, despite its modest valuation, the company’s earnings outlook remains uncertain due to declining alumina prices, according to an industry analyst.
Glencore International, a wholly-owned subsidiary of Glencore Plc, is both a cornerstone investor and a key customer. As stated in the prospectus, the two companies entered into an offtake agreement in January.
Meanwhile, Indonesia’s state aluminium unit commenced trial production at a new alumina refinery in January 2025, coinciding with the second phase of Nanshan’s expansion.
The market for Smelter-Grade Alumina (SGA) was valued at USD 52.6 billion in 2023 and is expected to reach USD 75.4 billion by the end of 2030, with a CAGR of 5.28 per cent for the forecast period 2024-2030.
The alumina market is anticipated to experience moderate growth in 2025, with the growth rate dependent on the interactions of various competing factors, following a marginal growth in annual production in 2024 (preliminary estimate). Although the long-term outlook is optimistic, the year 2025 may witness temporary fluctuations and uncertainties related to supply chain disruptions.
The global alumina market is expected to experience a price softening in 2025. This forecasted trend is primarily attributed to the commencement of new production capacities, which will significantly increase the supply of alumina in the global market.
Explore the latest industry-focused report, "Global Aluminium Industry Outlook 2025", for insights into alumina price trends and production forecasts.
Image credit: MarketScreener
Information credit: Mining Weekly
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