As of May 22, China's domestic alumina spot prices have seen a substantial rise, with the SMM Alumina Index reaching 3,773 yuan/ton, marking an increase of 272 yuan/ton or 7.77% since the beginning of May. Compared to the same day in April, prices have surged by 416 yuan/ton, reflecting a 14.06% rise.
Tight domestic bauxite supply and increasing alumina demand support alumina prices.
According to SMM's survey, bauxite capacity in Shanxi and Henan has not yet resumed after the 2023 shutdown, maintaining low monthly output. In April 2024, monthly bauxite production in Shanxi and Henan stood at 1.18 million tonnes and 0.4 million tonnes, down 38% YoY respectively. Due to the lower domestic bauxite output, the average utilisation rates of alumina refining capacity in Shanxi and Henan over the first four months of 2024 were only 69.4% and 62.2%, respectively.
According to SMM estimates, domestic demand for bauxite in 2024 is projected to reach 217.01 million tonnes, while domestic supply is expected to be 62 million tonnes. However, if the idle capacity of bauxite mines in Shanxi and Henan doesn’t resume in the rest of 2024, the domestic production will be about 56 million tonnes. This indicates that over 70% of China's bauxite supply is dependent on imports.
In the case of imported bauxite, tight domestic bauxite supply has also pushed up the spot price of imported bauxite. The CIF price of imported bauxite has increased by 2.05 per cent since 15 March, fluctuating between $71.5 and $71.6 per tonne.
Considering the alumina demand, smelters in Yunnan have restarted idled capacity since mid-March. As of May 10, Yunnan's annual operating capacity was around 5.15 million tonnes, an increase of about 660,000 tonnes from early March and 480,000 tonnes from early April. As the hydropower supply in Yunnan gradually recovers, the remaining capacities will continue to be restarted in the next few weeks. The resumption of primary aluminium production in Yunnan increased monthly alumina demand by approximately 77,000 tonnes in April, significantly supporting alumina spot prices in the southwest region and prompting "north-to-south" alumina transportation. In northern markets, alumina procurement became more active in May, which resulted in high premium transactions and a significant rise in spot prices.
The current domestic primary aluminium installed capacity is 45.2 million tonnes, with an operating capacity is 42.6 million tonnes in April, up 1.24% MoM. The alumina demand is expected to keep rising over the next few months in line with the restart of aluminium smelting capacity in China.
Alumina market in the rest of the world is becoming tighter due to supply issues
In early March, a gas pipeline leak in Western Australia affected Rio Tinto's Gladstone operations, reducing alumina production at the Yarwun refinery. On May 21, Rio Tinto announced that repairs would take longer than expected, with normal operations resuming in the second half of the year. SMM estimates that Yarwun's output fell by about 20%, with monthly production expected at 210,000 tonnes in May, a 17% decrease y/y. Additionally, NALCO announced production issues at its alumina plant in early April, affecting alumina shipments. Furthermore, Alcoa announced the shutdown of the Kwinana refinery in early 2024, which reduced the company's alumina production by around 0.9 million tonnes.
Considering the demand side, in April 2024, Trimet's three primary aluminium smelters in Germany began resuming production with a total capacity of 540kt, which is expected to reach full capacity by mid-2025. Concerns over alumina supply have driven up overseas prices, with Western Australia's FOB alumina price at $425/ton as of May 22, up 12.14% from the same period in April.
Soaring Western Australia’s FOB alumina prices have shut the alumina import window down for Chinese companies. China's alumina imports in April were 108.4kt, down 64.32% MoM. At the same time, China exported 130.4kt alumina to the rest of the world and became a net exporter. In the rest of 2024, China could remain an alumina net exporter as the alumina supply is very tight in the rest of the world.
SMM estimates that overseas metallurgical grade alumina production will reach 57.8 million tonnes in 2024. As primary aluminium production is expected to reach 29.7 million tonnes, the total overseas demand for metallurgical grade alumina will be 57.2 million tonnes in 2024. SMM anticipates the alumina market in the rest of the world will become much tighter than in previous years.
SMM predicts that global metallurgical grade alumina supply will reach its tightest point in 2024 and begin to ease in 2025. Alumina production growth will mainly be concentrated in Asia, particularly Indonesia and India. By 2026, Indonesia's metallurgical grade alumina capacity is expected to reach 9.8 million tonnes, and India's to reach 11.87 million tonnes. This is an increase of 152% and 57% respectively compared to 2023. SMM estimates that in 2025, the supply of metallurgical grade alumina will exceed the demand for primary aluminium smelting by 2.7 million tonnes, and this surplus will increase to 4.3 million tonnes in 2026.
![La tendencia de desestabilización de lingotes de aluminio antes de las vacaciones continúa, proporcionando un fuerte soporte para que los precios del aluminio fluctúen en niveles altos [Actas de la reunión matutina de aluminio de SMM]](https://imgqn.smm.cn/usercenter/HVmVi20251217171654.jpg)
