SMM Comments: Alumina Futures Prices Fell Back From Highs Due To Production Resumptions And Expanded Delivery Warehouses Capacity

SHANGHAI, Jan 4 (SMM) –After most-traded alumina futures contracts hit a record high of 3,838 yuan/mt yesterday, affected by the bearish sentiment and expanded delivery warehouses capacity of alumina futures, its gains gradually fell back. As of noon closing, the prices fell by 7.02%.
According to SMM analysis, influenced by heavy pollution weather in the northern region at the end of the year, alumina refineries may face a new round of production controls. SMM estimates that the alumina operating capacity in China was 80 million mt in December 2023, with a daily output of 219,000 mt.
According to SMM data, the average full cost of the domestic aluminum industry in 2023 was approximately 16,487 yuan/mt, a YoY decrease of 8.4%, and the industry’s average profit was 2,205 yuan/mt, a YoY increase of 14%. Stable profits make it easier for aluminium smelters to accept higher alumina prices.

SMM Outlook: At present, the supply is still expected to be tight; the aluminum smelters are still taking a wait-and-see attitude. SHFE’s adjustment on transaction fees of some alumina futures contracts, the expanded capacity of the alumina delivery warehouses, as well as the gradual resumption in reduced production capacity of some alumina refineries in Henan, erased some of the gains of alumina futures price. We need to pay attention to the expectation for alumina production resumption in Shanxi-Henan and its progress.