Downstream Aluminum: 2Q Preview: Expect Strong Prints on Metal Tailwinds Driving Potential Guidance Upgrades; Stay N-rated CSTM & UW-rated KALU

Research evidence excerpt

Downstream Aluminum: 2Q Preview: Expect Strong Prints on Metal Tailwinds Driving Potential Guidance Upgrades; Stay N-rated CSTM & UW-rated KALU

J P M O R G A N North America Equity Research

17 July 2026

Downstream Aluminum

2Q Preview: Expect Strong Prints on Metal Tailwinds

Driving Potential Guidance Upgrades; Stay N-rated

CSTM & UW-rated KALU

Our downstream aluminum coverage has come off recent peaks (-14% T1M), Metals & Mining

ACin-line with the XME (-17%), partly due to scrap spread compression as the temporary Bill Peterson

re-opening of the Strait has weighed on the MWTP (-7%). CSTM has underperformed (1-415) 315-6766

(-15%), driven by both scrap spreads and EU risks (i.e. potential scrap export tariff, bill.peterson@jpmchase.com

VW plant closures and energy inflation) whereas we suspect KALU’s (-12%) greater Bennett Moore

commercial aero exposure continues to offer valuation support (Figure 5IndexedDownstreamAluminumStocksvs.UBCScrapSpreads&Indices/Figure 6DownstreamAluminumEquities1yr-FWDEV/EBITDARe-ratingvs.FY27BGEBITDARevisions:t-3M). (1-212) 622-0188

On CSTM, we sense some investors expecting another FY26 guidance upgrade, bennett.moore@jpmchase.com

which we feel is possible given better-than-expected 1H spreads, and while Rock Hoffman

compressing, we also feel these could land at levels above management’s initial 2H (1-212) 259-5055

rock.hoffman@jpmchase.com

(and potentially FY27) assumptions. The debate on KALU remains rooted in J.P. Morgan Securities LLC

valuation, with some investors thinking >9x on FY27 looks stretched but lacks a

negative catalyst, while others have pointed to underappreciated value in the

company’s commercial aero exposure with BA’s ramp progressing. On the stocks, we