SMM Morning Comment on Alumina 2.18
Futures market: During the night session, the most-traded alumina 2505 contract opened at 3,429 yuan/mt, reached a high of 3,429 yuan/mt, a low of 3,383 yuan/mt, and closed at 3,401 yuan/mt, down 0.82%. Open interest stood at 167,000 lots, an increase of 4,173 lots. Spot price: On February 17, SMM alumina was quoted at 3,331 yuan/mt, down 25 yuan/mt from the previous trading day.
Ore market: Demand side, spot alumina prices continued to decline, and alumina refineries lowered their acceptance of high-priced bauxite. According to SMM, buyers generally reported being unable to accept imported Guinean bauxite priced above $100/mt. Supply side, suppliers adjusted their quotes downward from highs. SMM learned that some suppliers' quotes have fallen below $100/mt. However, considering new alumina capacity and the rigid demand for alumina production, suppliers still showed some sentiment to stand firm on quotes. Recently, no new bauxite transactions were reported, but both buyers and sellers lowered their quotes, and bauxite prices pulled back from highs. As of February 17, the SMM imported bauxite index was $98.23/mt, down $9.28/mt WoW. The SMM Guinean bauxite CIF average price was $97/mt, down $11/mt WoW.
Industry dynamics: On February 17, 25,000 mt of alumina was traded overseas at a transaction price of $510/mt FOB Go Dau, Vietnam, for March shipment.
Spot-futures price spread daily report: According to SMM data, on February 17, the SMM alumina index was at a discount of 73 yuan/mt against the most-traded contract's latest transaction price at 11:30.
Warehouse warrant daily report: On February 17, the total registered volume of alumina warehouse warrants increased by 40,524 mt from the previous trading day to 95,500 mt. In Shandong, the total registered volume remained unchanged at 4,513 mt. In Henan, the total registered volume increased by 18,008 mt to 18,000 mt. In Guangxi, the total registered volume remained unchanged at 0 mt. In Gansu, the total registered volume remained unchanged at 0 mt. In Xinjiang, the total registered volume increased by 22,516 mt to 7.3 mt.
Overseas market: As of February 17, the FOB Western Australia alumina price was $520/mt, with ocean freight at $19.70/mt. The USD/CNY exchange rate sell price was around 7.27. This price translates to an external selling price of approximately 4,512 yuan/mt at major domestic ports, which is 1,181 yuan/mt higher than domestic alumina prices. The alumina import window remained closed.
Summary: Supply side, some alumina refineries in northern China reported maintenance this week, which may slightly impact alumina supply in the short term. Weekly operating rates for alumina slightly decreased by 0.33 percentage points. Demand side, some aluminum production cuts and technological transformation capacities 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 significantly reduced their acceptance of high-priced bauxite, and bauxite suppliers also lowered their quotes. Imported bauxite prices fell, potentially reducing alumina production costs. However, the current spot transaction prices for alumina in northern China are below the theoretical marginal production cost. Overall, large-scale alumina production cuts have not yet occurred, and the spot alumina market remains relatively ample. Spot transaction prices continued 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.]
