The Australian aluminium industry stands at a crossroads as the U.S. flirts with sweeping tariffs on aluminium imports, putting South32 (ASX:S32) in the spotlight.
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Is this a moment for Australia to prove its resilience, or are we headed into a looming disaster for its prized producer?
Australia is the world’s largest alumina exporter and the seventh-largest aluminium producer, raking in $15 billion in export earnings in 2023 and supporting over 60,000 families.
Yet, despite this global footprint, only 10% of its aluminium exports go to the U.S., making up just 2.5% of America’s total imports.
So why is the U.S. targeting Aussie aluminium? Peter Navarro, a key Trump trade adviser, claims it’s “killing the U.S. market.” But let’s be real here – Australia’s small slice of the pie isn’t the root of America’s aluminium woes. Analysts argue domestic inefficiencies are the real culprit, not competition from Down Under.
This puts South32 in a crucial position. As one of Australia’s largest aluminium producers, the proposed tariffs present both challenges and opportunities. While losing access to the U.S. market would sting, South32’s diverse operations across multiple regions and commodities could help offset the blow.
Looking at the chart, South32 is holding strong. Twice finding support around $2.70, the stock now trades above $3.30. A breakout past $3.60 could see it test $4, while a slip below $3.30 might bring $2.70 back into play.
Tariffs or not, Oz’s aluminium sector is no stranger to headwinds. The real question is—can it pivot and adapt in time?
South32’s ability to navigate shifting trade dynamics might just hold the key.
The best-performing sectors include Industrials, up over 2%, followed by Consumer Discretionary and Financials, both up over 1%. The worst-performing sectors include Healthcare, down over 3%, followed by Information Technology, down over 1.5% and Utilities, down over 1%.
The best-performing stocks in the ASX 100 include Computershare Ltd, up over 20%, followed by Light and Wonder Inc., up over 8%, and ASX Limited, up over 6%.
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The worst-performing stocks include Insurance Australia Group, down over 11%, followed by CAR Group, down over 7% and AGL Energy, down over 6%.
The All-Ordinaries Index surged to a record high of 8,839 points this week, fuelled by strong buyer momentum. However, the rally was met with selling pressure on Thursday; the index ultimately closed just shy of 0.5% higher.
This move came as no surprise, given the solid buying support from the previous week, especially in the face of a wave of uncertain news out of the U.S.
So, what’s next? Historically, the All-Ordinaries Index has delivered an annual return of around 9%. What’s intriguing is we’re already a third of the way there and the year is barely two months old. The speed of this market rally is impressive, but more importantly, it’s looking sustainable. Why?
Let’s examine the past three major rallies. Since November 2023, the All-Ordinaries has posted two solid moves up which garnered double-digit returns—averaging around 15%. The trajectory of the current rise, from the low on December 20, mirrors those previous moves, indicating a healthy pace.
What does this mean? The market isn’t overstretched yet, which suggests we could see a strong finish to the reporting season in March before any major pullbacks.
So, if you think you’ve missed out on the opportunities of 2025 so far – think again. The tide is rising, and there are opportunities across almost every sector right now. The Energy sector, in particular, looks like it’s ready to break out after being underappreciated throughout much of 2024.
Keep an eye on this one – it could be on the brink of a major upswing.
For now, good luck and good trading.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%.
He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au.
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