Alumina Futures and Spot Prices Both Weaken, Short-Term Downward Trend May Persist [SMM Morning Comment on Alumina]

Published: Jan 16, 2025 08:59

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[SMM Morning Comment on Alumina: Alumina Futures and Spot Prices Weaken, Short-Term Downward Trend Likely to Persist] Recently, the weekly operating rate of alumina has continued to increase slightly, while demand remains relatively stable. With reports of low-price transactions emerging in the market, some suppliers have become more active in selling, leading to an increase in the circulation of spot alumina in the market and a wider discount in spot transactions compared to online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, with supply anticipated to increase. On the demand side, aluminum operating rates remain relatively stable. The fundamentals of alumina are expected to maintain a slightly surplus pattern, and spot alumina prices are likely to continue their downward trend in the short term.

SMM Morning Comment on Alumina 1.16

Futures Market: During the overnight session, the most-traded alumina 2502 futures contract opened at 3,795 yuan/mt, with a high of 3,830 yuan/mt and a low of 3,769 yuan/mt, finally closing at 3,804 yuan/mt, up 9 yuan/mt or 0.24%. Open interest stood at 93,000 lots, an increase of 4,447 lots.

Industry Updates:

1. According to SMM, starting January 16, a major alumina refinery in Shandong adjusted its purchase price for 32% ion membrane liquid caustic soda, raising it by 40 yuan/mt from 830 yuan/mt to an ex-factory price of 870 yuan/mt under the two-invoice system (equivalent to a price of approximately 2,719 yuan/mt on a 100% basis).

2. The merger negotiations between Aluminium Bahrain and Saudi Arabian Mining Company have officially concluded. Reports indicate that after reaching a draft agreement, Saudi Arabian Mining Company plans to sell the equity of its aluminum company, bauxite, and alumina companies to Aluminium Bahrain. In return, Aluminium Bahrain will issue new shares to Saudi Arabian Mining Company.

3. On January 14, 2,000 mt of alumina were traded in Guangxi at 4,980 yuan/mt.

Spot-Futures Price Spread Daily Report: According to SMM data, on January 14, the SMM Alumina Index showed a premium of 1,133 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On January 15, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 43,000 mt. In Shandong, the total registered warehouse warrants increased by 901 mt to 901 mt. In Henan, the total registered warehouse warrants remained unchanged at 12,000 mt. In Guangxi, the total registered warehouse warrants decreased by 301 mt to 0 mt. In Gansu, the total registered warehouse warrants remained unchanged at 0 mt. In Xinjiang, the total registered warehouse warrants increased by 5,709 mt to 30,000 mt.

Overseas Market: As of January 15, the FOB Western Australia alumina price was $610/mt, with an ocean freight rate of $21.9/mt. The USD/CNY exchange rate sell price was around 7.35. This translates to an external selling price of approximately 5,329 yuan/mt at major domestic ports, which is 407 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, the weekly operating rate of alumina has continued to increase slightly, while demand has remained relatively stable. With reports of low-price transactions emerging in the market, some suppliers have become more active in selling, leading to an increase in the availability of spot alumina in the market. Spot transactions have seen a wider discount compared to online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, leading to an anticipated increase in supply. On the demand side, aluminum operating rates remain relatively stable. The alumina market is expected to maintain a slight surplus in the short term, and spot alumina prices may continue their downward trend.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not substitute this for independent judgment. Any decisions made by clients are not related to SMM.]

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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