The Price Center of Spot Alumina Transactions Shifts Downward; Spot Alumina Prices May Maintain a Downward Trend in the Short Term [SMM Morning Comment on Alumina]

SMM Morning Comment on Alumina for January 7

Futures Market: During the night session, the most-traded alumina 2502 futures contract opened at 4,280 yuan/mt, with a high of 4,292 yuan/mt and a low of 4,195 yuan/mt, finally closing at 4,230 yuan/mt, down 74 yuan/mt or 1.71%. Open interest stood at 114,000 lots.

Spot Alumina: In Henan, 2,000 mt of spot alumina were traded at a transaction price of 5,300 yuan/mt.

Industry Updates:
(1) A major alumina refinery in Shandong raised its liquid caustic soda purchase price. According to SMM, starting January 7, the refinery adjusted its purchase price for 32% ion membrane liquid caustic soda, increasing it by 20 yuan/mt from the previous 750 yuan/mt. The ex-factory price under the two-invoice system is now 770 yuan/mt (equivalent to approximately 2,406 yuan/mt on a 100% basis).
(2) According to Bloomberg, the State Power Investment Corporation of China (SPIC) will commence construction of Guinea's largest alumina refinery in March 2025, with completion expected by year-end 2027. The refinery will have an annual alumina capacity of 1.2 million mt, making it the largest alumina refinery in Guinea and the second processing facility after Rusal's Friguia alumina refinery (annual capacity of 600,000 mt). Additionally, SPIC plans to build a 250 MW power plant, of which 100 MW will supply the State Grid Corporation of China. In 2023, SPIC exported 3.14 million mt of bauxite. As the world's largest bauxite exporter, Guinea's military government has actively promoted the establishment of local processing facilities by miners in recent years to boost economic growth. The agreement between SPIC and the government was signed just two months after General Doumbouya, the military leader, blocked bauxite exports by EGA. The government has demanded accelerated construction of alumina refineries and warned that if SPIC fails to achieve commercial production by December 2028, its mining rights may be revoked.
(3) Australia's Metro Mining achieved record shipments in 2024 and signed a supply contract for 2025 with EGA. Metro Mining Limited announced that its bauxite shipments in 2024 reached a record high of 5.7 million wmt, up 24% YoY. Additionally, the company signed a multi-vessel shipping contract with Emirates Global Aluminium for 2025 and set its shipment target for 2025 at 6.5–7 million wmt.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 a.m. on January 6, the SMM alumina index showed a premium of 1,288 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 6, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 12,300 mt. By region, Shandong's total registered warehouse warrants remained at 0 mt, Henan's at 0 mt, Guangxi's at 301 mt, Gansu's at 0 mt, and Xinjiang's at 12,000 mt.

Overseas Market: As of January 6, the FOB Western Australia alumina price was $681/mt, with an ocean freight rate of $22.45/mt. The USD/CNY exchange rate sell price was around 7.35. This translates to an external selling price of approximately 5,922 yuan/mt at major domestic ports, 319 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: Recently, the weekly operating rate of alumina has rebounded slightly, and alumina supply has increased slightly. With technological transformations and production cuts at aluminum smelters in Guangxi, Sichuan, and other regions, alumina demand has slightly declined. The previously tight alumina supply has improved. As of the end of December, aluminum smelters' alumina raw material inventory rebounded slightly, while downstream restocking and purchasing enthusiasm weakened. Acceptance of high-priced spot alumina has decreased, and with reports of some low-priced transactions, suppliers' willingness to sell has increased. In the short term, spot alumina prices are expected to maintain a slight downward trend.

[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.]