Materials:Potential supply disruption in the Middle East will support the aluminium price

Potential supply disruption in the MiddleEastwill support the aluminium price The MiddleEast(including the Gulf Cooperation Council and Iran)accountedfor roughly ~9% of the world’saluminiumoutput (73.8mt) in 2025.Weexpectthewar in Iran willaffect thealuminiumoutputon two fronts.(1) Iran’s aluminiumoutput (~620kt)accounted for~0.8%of the world’s output in 2025.Thedestruction ofpowerinfrastructureand logistics systemin the country, if any,will hurt theproduction.(2)The shutdown of the Strait of Hormuz will affect theshipmentof aluminaand bauxite to theentireMiddleEast, andthe other wayround,the shipment of aluminium out from the region.The US President DonaldTrump revealed that the air strike will possibly last for four weeks. We expectthe supply chain disruption will lend support to the aluminium price. We seeChina Hongqiao (1378 HK, BUY)a beneficiary. ForChuangxin Industries(2788 HK, BUY),itscapacity in Saudi Arabia is still in construction stage, andtherefore we do not expect much impact. China Materials Sector Wayne FUNG, CFA(852)3900 0826waynefung@cmbi.com.hk Jake Zhang(852) 3900 0849jakezhang@cmbi.com.hk Related reports:Aluminium price to be fuelled by tight supply throughout 2026–4 Feb 2026(link) Aluminium capacity in Iran.There arefour major smelters in Iran with anestimated total capacity of 670ktpa.Of this, two smelters (~450ktpa) arelocated at the coastal region ofthePersianGulfandare nearthe Strait ofHormuz. Chuangxin Industries (2788 HK)-Capacity growth in Saudi Arabia +superb cost advantage on low greenenergy cost in China-4 Feb 2026 (link) China Hongqiao (1378 HK)-Raisingearnings and TP on higher aluminiumprice–4 Feb 2026 (link) CGN Mining (1164 HK)-Newlyproposed policy in Kazakhstan: littleimpact on asset rights but risk tovaluation–9 Dec 2025 (link) China Hongqiao (1378 HK)–Further re-rating is possible–12 Nov 2025 (link) Uranium-Tight uranium supplycontinues to support a multi-yearupcycle; Positive on CGN Mining–2 Oct2025 (link) CGN Mining (1164 HK)-Further upsidedriven by higher uranium price–2 Oct2025 (link) China Hongqiao–Lack of Interimdividends but new buyback scheme toboost confidence–18 Aug 2025 (link) Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwithrespect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be,directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and FuturesCommission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after thedate of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report.CMBIGM or its affiliate(s) have investment banking relationship with the issuers covered in this report in preceding 12 months. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 months: Stock with potential return of+15% to-10% over next 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDSELLNOT RATED :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsCMB InternationalGlobal MarketsLimited OUTPERFORMMARKET-PERFORMUNDERPERFORM Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International CapitalCorporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on theperformance