Alumina Prices Have Been Falling for Nearly Two Months, While Bauxite Prices Face Significant Pullback [SMM Analysis]

SMM February 14 News:

From December 11 to 16, 2024, the SMM alumina index price reached a nearly two-year high at 5,769 yuan/mt. Subsequently, spot alumina transaction prices began to decline. As of February 14, 2025, the SMM alumina index price had dropped to 3,356 yuan/mt, a cumulative decrease of 2,413 yuan/mt, falling below the starting point of the alumina price increase that began in August 2024.

During the decline in spot alumina prices, the price of its raw material, bauxite, did not experience a YoY decrease. Supported by the rigid demand for alumina production and new projects, the supply and demand fundamentals of bauxite remained in a tight balance. Underpinned by these strong fundamentals, bauxite prices continued an upward trend for some time after spot alumina prices began to decline. As of now, bauxite prices remain significantly higher than the levels seen in August 2024 and earlier, leading to a substantial narrowing of alumina profit margins.

According to SMM's daily cost-profit model calculations, as of February 14, 2025, theoretical alumina profits had narrowed to 104 yuan/mt, a decrease of nearly 2,400 yuan/mt compared to the theoretical profit of around 2,500 yuan/mt in mid-December. This week, spot alumina prices in northern China fell to approximately 3,200-3,400 yuan/mt, roughly corresponding to the cash cost of producing alumina from Guinean bauxite at around $80/mt in Shanxi and Henan regions. Currently, the theoretical full cost of producing alumina using imported bauxite in Shanxi and Henan has exceeded the recent spot transaction prices.

Alumina refineries in Shanxi and Henan have entered a loss-making state, and spot alumina prices in Shandong have also fallen to near cost levels, significantly reducing alumina refineries' acceptance of high-priced bauxite. Bauxite suppliers have also lowered their offer prices, and imported bauxite prices have pulled back under pressure. As of February 14, the SMM imported bauxite CIF price index was reported at $98.23/mt, down $11.03/mt WoW.

Currently, the bauxite market remains in a state of negotiation between upstream and downstream players, with no recent reports of transactions involving imported Guinean bauxite. Alumina prices have not yet stabilized, and under cost pressure, alumina refineries may find it difficult to accept Guinean imported bauxite priced above $100/mt. From a supply and demand perspective, on the demand side, only small-scale alumina capacity reductions or technological transformation plans are observed in northern China, with no large-scale production cuts in alumina. Coupled with the raw material demand from subsequent new capacity, bauxite demand remains high. On the supply side, imports of Guinean bauxite are expected to maintain growth, but Australian bauxite imports may decline due to the impact of the rainy season, resulting in an overall tight balance in the bauxite market. Bauxite suppliers still show a sentiment to stand firm on quotes, and there are currently few offers below $100/mt in the market. In the short term, imported bauxite prices may enter a state of fluctuation.

(The above information is based on market data and comprehensive assessments by the SMM research team. The information provided herein is for reference only and does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this information for independent judgment. Any decisions made by clients are unrelated to SMM.)

Data Source: SMM Click on the SMM Industry Database for more information

(Mingxin Guo 021-51595800)