SMM Morning Comment on Alumina for February 6
Futures: The most-traded alumina 2505 futures contract opened at 3,460 yuan/mt overnight, with a high of 3,485 yuan/mt and a low of 3,454 yuan/mt, closing flat at 3,460 yuan/mt. Open interest increased by 7,516 lots to 117,000 lots.
Industry Updates:
1. According to SMM, the mainstream alumina refineries in Guangxi Province raised their caustic soda procurement prices by 550 yuan/mt (on a 100% basis) in February compared to January. The delivery-to-factory price for 50% ion membrane liquid caustic soda is approximately 4,400 yuan/mt (on a 100% basis), with slight variations in some regions due to different transportation distances.
2. On January 27, 30,000 mt of alumina was traded overseas at a transaction price of $520/mt FOB Gladstone, Australia, or $525/mt FOB Kendawangan, Indonesia, for March shipment.
3. On February 3, 30,000 mt of alumina was traded overseas at a transaction price of $527/mt FOB Gladstone, Australia, or $531/mt FOB Western Australia, at the seller's option, for late March shipment.
Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 a.m. on February 5, the SMM alumina index showed a premium of 332 yuan/mt against the most-traded contract's latest transaction price.
Warehouse Warrant Daily Report: On February 5, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 28,200 mt. The total registered warehouse warrants in Shandong were unchanged at 2,410 mt, in Henan at 8,702 mt, in Guangxi at 0 mt, in Gansu at 0 mt, and in Xinjiang at 1.71 mt. Overseas Market: As of February 5, the FOB Western Australia alumina price was $531/mt, with ocean freight rates at $19.95/mt. The USD/CNY exchange rate sell price was around 7.29, translating to a delivery-to-mainstream domestic port selling price of approximately 4,620 yuan/mt, which is 790 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.
Summary: Recently, domestic weekly operating rates for alumina have continued to fluctuate at highs, while overseas alumina transactions have increased, leading to price declines and ample alumina supply. During the Chinese New Year, domestic spot alumina transactions were relatively sluggish, with cost support evident. In north China, the decline in spot alumina transaction prices has significantly narrowed, with current transaction prices approaching the theoretical marginal cost of alumina production in the region. In south China, spot alumina prices have accelerated their decline, and the price difference between north and south China narrowed during the week. However, bauxite suppliers have recently lowered their quotations, and alumina cost support is expected to weaken in the future. In the short term, no large-scale production cuts for alumina have been reported, and the spot alumina market is expected to remain relatively well-supplied. Prices are expected to maintain a downward trend in the short term.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]
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