ASX Aluminium Stocks: Investing in 2023 Market Trends

Team Veye | 24-Aug-2023 aluminium stocks asx

Aluminium is a silvery metal. It is very light yet strong; some alloys are even stronger than steel. Aluminium is both malleable and ductile. Aluminium is a very good heat and electrical conductor. It is also highly rust-resistant and non-toxic. Aluminium can be alloyed with almost any other metal. Aluminium is inflammable, non-magnetic, and non-sparking.

Aluminium is smelted from alumina, which is refined from bauxite ore. More than 90% of the world's bauxite production is used to make alumina, with most of the remaining 10% used by the abrasive, refractory, and chemical industries. The applicability of bauxite is also there in the production of high-alumina cement as reported Geoscience Australia. The largest resources of bauxite occur in Guinea, Australia, Brazil, and Vietnam. Rio Tinto Limited (ASX: RIO) is engaged in mineral and metal exploration, development, production, and processing in Australia. The company's portfolio of assets contains aluminium.
The spot price for alumina and aluminium is recorded daily on the London Metal Exchange (LME).

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What are ASX Aluminium Shares?

Australia aluminium producing companies listed in the Australian stock exchange are called ASX aluminium shares, where traders do trading transaction on these ASX aluminium shares. There are large cap to mid-cap and small level companies proactively involve in the exploration and mining activities in Australia. Some good ASX aluminium companies that are ASX alumunium shares from higher market cap to lower market cap (dated as of 22 August 2023) are as follows:

RIO Tinto Limited (ASX: RIO); market cap: $39.1 billion.
SOUTH32 Limited (ASX: S32); market cap: $16.95 billion.
Alumina Limited (ASX: AWC); market cap: $3.51 billion.
Capral Limited (ASX: CAA); market cap: $146.93 million.
Altech Batteries Limited (ASX: ATC); market cap: $110.29 million.

Investing in ASX Aluminium Stocks?

Aluminium prices have taken a sharp correction from 2022 onwards after giving a speedy run rate from 2020. ASX Aluminium stocks have also performed significantly well with phenomenal returns. Investors who had loaded positions in ASX aluminium stocks by then would have made excellent gains in their portfolios. There are well-known ASX aluminium stocks that have delivered good returns in the last year. For example: Canyon Resources Limited (ASX: CAY) has given a return of +22.45% in the last year. (YTD as of August 23, 2023). RIO Tinto Limited (ASX: RIO) performed a 10.38% return in the last year (YTD as of August 23, 2023).

Investing in such stocks may yield a better return over a long period of time. Investors must make a well-informed decision before allocating funds to ASX aluminium stocks.

Pros and Cons of Investing in Aluminium Shares

There are significant advantages over investing in aluminium ETFs, which provide less risk with varied exposure through different aluminium stocks. Aluminium ETFs facilitate more diversified exposure to aluminium stocks. Investing in aluminium ASX stocks could provide capital gains as well as dividend income. The large ASX companies remain profitable even when aluminium is in a price correction.

While there are several advantages to investing in aluminium ASX shares, there are also disadvantages. Investing in individual aluminium stocks carries high risk due to their volatile nature compared to investing through an ETF. Investors should invest based on their own risk appetite. Holding for so long can only materialize a justifiable return.

Top ASX Aluminium Stocks to Watch: Biggest Companies in 2023

Aluminium is produced by mining and processing bauxite. However, due to supply chain issues and the persistence of ever-changing demand, investing in aluminium appears to be more volatile. Here are some of the top ASX aluminium stocks are as follows:

SOUTH32 Limited (ASX: S32)

South32 Limited (ASX: S32) has a market cap of $17.07 billion and a current market price of $3.775 (as of August 23, 2023) is a well-diversified mining and metals company in the world. The company produces commodities including bauxite, alumina, and aluminium in Australia, Southern Africa, and South America.

The company reported aluminium production, up by 14% in FY2023, as Hillside Aluminium achieved record production and benefited from investments in low-carbon aluminium capacity at Mozal Aluminium and Brazil Aluminium.

Alumina production was reduced by 4% in FY2023 due to temporary outages in the June quarter. Both refineries have returned to nameplate production rates, and FY2024 guidance remains unchanged. The underlying depreciation and amortization are expected to be approximately US$920 million, including approximately US$125 million.

Alumina Limited (ASX: AWC)

Alumina Limited (ASX: AWC) has a market cap of $3.52 billion and a current market price of $1.213 (as of August 23, 2023). It is an Australia-based company. The company invests worldwide in bauxite mining, alumina refining, and an aluminium smelter through its 40% ownership of Alcoa World Alumina and Chemicals (AWAC). Alcoa Corporation owns the remaining 60% of AWAC.

The alumina price had strong support at the beginning of 2023, increasing to $371 per tonne in February before declining at the end of the half on the back of weak aluminium demand outside China and lower industry production costs Prices have risen again in the last 3 weeks, reflecting the tight global balance for alumina and a recovery in aluminium production in China.

 Capral Limited (ASX: CAA)

Capral Limited (ASX: CAA) has a market cap of $147.11 million and a current market price of $8.15 (as of August 23, 2023). It is engaged in the manufacturing and distribution of fabricated and semi-fabricated aluminium-related products. The company offers its products and services under the brands Genesis, Amplimesh, Juralco, AGS, Artisan, Futureline, Envy, Elegance, and Urban Plus.

The company reported a volume of 35,600 metric tonnes, down 2% on the prior period, supported by continuing strong market conditions in the half-yearly result for the period ending June 30, 2023. Underlying EBITDA of $31.7 million vs. 1H2022 of $31.6 millionand underlying EBIT of $20.7 million compared to 1H2022 of $21 million were on par with the prior period. Net profit after tax of $16.6 million compared to 1H2022's $22.2 million.

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Frequently Asked Questions (FAQ)

Which aluminium share is best?

Capral Limited (ASX: CAA) trades at a PE multiple of 4.32x, and with a dividend yield of 8.59%, the company has a market cap of $147.11 million and a current market price of $8.15 (as of August 23, 2023). It involves the manufacturing and distribution of fabricated and semi-fabricated aluminium-related products.

What is the largest aluminum company in Australia?

RIO Tinto Limited (ASX: RIO), with a billion-dollar market cap of $39.95 billion, is engaged in mineral and metal exploration, development, production, and processing. The company's portfolio of assets is condensed into four product groups: aluminium, copper and diamonds, energy and minerals, and iron. There are some products that are essential for the energy transition, and the focus is on growing businesses while decarbonizing and providing products to customers that support the transition to a low-carbon economy. The demand will face through 2035 will grow around 3.9% per year, with around half stemming from the energy transition as reported RIO TINTO Limited. 

How much aluminium scrap exported in 2021?

In 2021, Australia exported $579 million in scrap aluminium, making it the 8th largest exporter of scrap aluminium in the world. Scrap aluminium was the 48th most exported product in Australia in 2021. The main destinations of scrap aluminium exports from Australia are India ($107 million), South Korea ($93.1 million), Indonesia ($52.4 million), Malaysia ($45.8 million), and Thailand ($44.8 million).

The fastest-growing export markets for scrap aluminium from Australia between 2020 and 2021 were South Korea ($51.3 million), Indonesia ($42.1 million), and Hong Kong ($33.1 million);(As per the the website -https://oec.world/en/).

Should I invest in aluminium?

Aluminium is a lightweight, corrosion-resistant, recyclable, and chemical element that has wide applications, such as in construction, automobiles, aerospace, packaging, electronics, and many other industries uses. The global shift towards electric vehicles (EVs) has further enhanced demand for the metal. Aluminium is applicable in structural body frames and battery packs to keep electric cars light and improve battery efficiency.

On July 21, 2023, Rio Tinto Limited and Giampaolo Group, one of North America's largest fully integrated metal management businesses, entered into an agreement to form a joint venture to manufacture and market recycled aluminium products.

What is the most common aluminum stock?

The common aluminium stock is South32 Limited (ASX: S32), a diversified mining and metals company in the world. The company produces commodities including bauxite, alumina, and aluminium in Australia. 

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