Aluminum is at the center of a major pandemic-fueled disruption.
The coronavirus crisis is causing an aluminum can shortage as lockdowns accelerate demand for packaged food and drinks, The Wall Street Journal reported last week. Beverage makers Coca-Cola and Molson Coors have said they have seen aluminum supply tighten amid spikes in demand for their canned products.
With the entire supply chain — including beverage companies PepsiCo, Anheuser-Busch InBev and Constellation Brands and can suppliers Ball Corp. and Crown Holdings — feeling the crunch, one area should benefit most, two traders agreed on Friday.
"This is hurting the beverage makers the most," Gina Sanchez, founder and CEO of Chantico Global, told CNBC's "Trading Nation" on Friday.
"If you're in the business of getting beverage and product onto the shelf and you can't get the cans to get it on the shelf, that's a problem for you," she said. "The bigger you are, the better you can handle this, but I think that this goes back to the manufacturers as the biggest beneficiary of this cycle."
Ball Corp. and Crown Holdings, two of the biggest aluminum can makers, were Sanchez's choices for trading the shortage.
"Ball actually had the best performance [year to date], but Crown Holdings still has significant room for more expansion of their multiples," she said. "So, there's a valuation play there."
Craig Johnson, senior technical research analyst at Piper Sandler, said aluminum itself appears to be gearing up for another leg higher.
"It looks like to us that we're setting ourselves up for a retest back to those 2019 highs," he said in the same "Trading Nation" interview. "We've got a nice short-term downtrend reversal on the commodity. We are also seeing it move back above its 50- and 200-day moving average[s]. And we're starting to see a pickup in the relative strength."
That's a better sign for aluminum sellers than aluminum buyers, Johnson said.
"My favorite chart here is Ball Corp.," he said.
"This is a stock that is very close to breaking out to two-year new highs," he said. "I'm seeing a nice relative strength reversal versus the S&P 500. And on a measured move, on a breakout, I see this stock going to 110, so, nice upside here in that name."
Ball Corp. shares closed up more than 1% at $80.27 on Friday.
The supply chain's biggest losers will likely be the beverage companies, both traders agreed.
"These beverage makers cannot pass these price increases through to producers," Sanchez said. "An increase in the cost of the cans is going to squeeze their margins, not expand profit."
Johnson said those seeking to play the aluminum crunch should look elsewhere for their trades.
"What I'm seeing is kind of weak relative strength in those charts," he said. "If I'm looking to try to beat the market, which all portfolio managers are looking to do, this is not the spot to get that alpha."