The Total Registered Volume of Warehouse Warrants Increased by Nearly 15,000 mt WoW; Weekly Operating Rate of Alumina Slightly Decreased [SMM Alumina Morning Comment]

SMM Morning Comment on Alumina for 2.14

Futures Market: In the overnight session, the most-traded alumina 2505 contract opened at 3,340 yuan/mt, reached a high of 3,363 yuan/mt and a low of 3,325 yuan/mt, and finally closed at 3,335 yuan/mt, down 28 yuan/mt or 0.84%, with an open interest of 173,000 lots.

Spot Alumina: On Thursday, 8,000 mt of spot alumina was traded in Henan at a transaction price of 3,320 yuan/mt, while 5,000 mt was traded in Guizhou at a transaction price of 3,420 yuan/mt.

Industry News:

1. Overseas Alumina Transactions: On February 13, 30,000 mt of alumina was traded overseas for May shipment, with the buyer having the option of $505/mt FOB Brazil (95% prepayment) or CIF at the destination, equivalent to FOB Brazil plus freight (cash against documents).
2. Vedanta plans to commence production at the Sijimali bauxite mine in Q2 2025 to enhance alumina self-sufficiency. Vedanta Limited recently confirmed during its earnings call that its Sijimali bauxite mine in India is expected to start production in FY26 Q1 (April-June 2025). The mine's total planned capacity is 9 million mt. Once fully operational, it will meet 25%-30% of the company's bauxite demand, reducing reliance on imports. Currently, the company's alumina production costs are significantly influenced by the source of bauxite procurement. The supply cost of bauxite from the Sijimali mine is expected to be $260-$270/mt, while imported bauxite costs are higher, at approximately $330-$335/mt. Vedanta plans to achieve a 60%-65% alumina self-sufficiency rate after the Sijimali mine starts production and further increase it to 70% throughout the year. Additionally, the company's alumina production in Q4 2024 was 505,000 mt, up 1% QoQ, and is expected to increase by 10%-15% QoQ in Q1 2025.
3. According to SMM data, as of this Thursday, the national weekly operating rate of alumina refineries decreased by 0.33 percentage points WoW to 86.61%. Among them, the weekly operating rate in Shandong remained flat WoW at 92.66%; in Shanxi, it decreased by 1.03 percentage points WoW to 79.57%; in Henan, it decreased by 0.71 percentage points WoW to 68.45%; and in Guangxi, it remained flat WoW at 93.94%.

Spot-Futures Price Spread Daily Report: According to SMM data, on February 13, the SMM alumina index showed a premium of 28 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On February 13, the total registered volume of alumina warehouse warrants increased by 14,700 mt from the previous trading day to 45,600 mt. In Shandong, the total registered volume remained flat at 2,711 mt; in Henan, Guangxi, and Gansu, it remained flat at 0 mt; and in Xinjiang, it increased by 14,700 mt to 42,900 mt.

Overseas Market: As of February 13, the FOB Western Australia alumina price was $538/mt, with an ocean freight rate of $19.7/mt. The USD/CNY exchange rate sell price was around 7.31, translating to an external selling price of approximately 4,688 yuan/mt at major domestic ports, which is 1,297 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Supply side, some alumina refineries in northern China reported maintenance this week, which may slightly impact alumina supply in the short term. The weekly operating rate of alumina refineries decreased slightly by 0.33 percentage points this week. Demand side, some aluminum capacity in Sichuan and other regions may gradually resume production, increasing demand for alumina. Cost side, due to the sharp decline in spot alumina prices, alumina refineries have significantly reduced their acceptance of high-priced bauxite, leading to lower offers from bauxite holders and a decline in imported bauxite prices. Alumina production costs may decrease slightly. However, the current spot transaction prices of alumina in northern China are below the theoretical marginal cost of production. Overall, large-scale production cuts in alumina have not yet occurred, and the spot alumina market remains relatively ample in supply. Spot transaction prices continue to decline and may 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.]