Rio Tinto (RIO) PT Raised to $83.50 at Bernstein SocGen Amid Higher Aluminum Prices

Bernstein SocGen Group analyst Bob Brackett raised the price target on Rio Tinto (NYSE: RIO) to $83.50 (from $82.00) while maintaining a Outperform rating.

The analyst commented: "7% of demand is sourced from the Middle East and (a) is strongly export-oriented and (b) relies heavily on the Strait of Hormuz to reach markets. Those tons cannot currently reach market amidst two nation’s blockades. 3% of global demand has been damaged by military strikes. Restart and rebuild times for smelters are measured in months, quarters and years. We provide full details on damages below. As a result, aluminum prices have moved to the second highest levels ever witnessed (closing in on all-time highs experienced during the 2022 Russia-Ukraine conflict).

In our coverage, RIO (outperform) is the only significant beneficiary of higher prices. With a production of ~3 MT (3% of global demand), simplistically, RIO and its ~$28 bln EBITDA benefits from ~$300 mln for every $100/t move in price and aluminum is up $700/t year to date."

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