The Spot-Futures Price Spread Narrowed to a Discount of 19 Yuan/mt, Domestic Alumina Exports May Have Been Halted [SMM Alumina Morning Comment]

SMM Morning Comment on Alumina for February 25

Futures Market: During the night session, the most-traded alumina 2505 futures contract opened at 3,400 yuan/mt, with a high of 3,420 yuan/mt and a low of 3,391 yuan/mt, eventually closing at 3,402 yuan/mt, up 18 yuan/mt or 0.52%, with an open interest of 166,000 lots.

Ore Market: As of February 24, the SMM Imported Bauxite Index stood at $96.42/mt, flat from the previous trading day. The SMM Guinea Bauxite CIF average price was $95/mt, unchanged from the previous trading day, while the SMM Australian Bauxite CIF average price also remained at $95/mt.

Industry News:

1. Putin: Russia and the US Could Agree to a 50% Arms Reduction and Plan to Resume Aluminum Product Exports to the US On February 25, local time on the 24th, Russian President Vladimir Putin stated that Ukrainian President Volodymyr Zelensky is avoiding peace talks, as such talks would necessitate lifting the wartime state and holding elections in Ukraine. However, Zelensky's current approval rating is only half that of Valerii Zaluzhnyi, the former Commander-in-Chief of the Ukrainian Armed Forces and now Ambassador to the UK. Putin mentioned that Zelensky's decree prohibiting negotiations with Russia has cornered him. Putin also emphasized that Russia does not oppose Ukraine's statehood but believes its territory should not be used as a hostile base against Russia. He called for European countries to participate in negotiations related to the Ukraine issue. He noted that he and former US President Donald Trump had not engaged in substantive discussions on resolving the Ukraine conflict. Putin revealed that Russia and the US could agree to a 50% reduction in arms. He also mentioned that companies from both countries have begun discussing cooperative projects, and Russia plans to resume aluminum product exports to the US, with an export volume of 2 million mt, which would help stabilize the product's price.
2. Aluminum Ingot Inventory: Despite improved market liquidity after the Lantern Festival and increased aluminum ingot outflows from warehouses over the past week, totaling 119,100 mt (up 7,600 mt WoW), domestic aluminum ingot inventory continued its post-holiday buildup. According to SMM data, as of February 24, 2025, domestic social inventory of aluminum ingots reached 873,000 mt, with available inventory climbing to 747,000 mt, up 28,000 mt from last Thursday. The inventory buildup pace has not slowed. Notably, YoY, the post-Chinese New Year second-week aluminum ingot inventory increase exceeded last year's level, with the buildup intensity ranking among the highest in the past seven years. The current inventory buildup slightly exceeded expectations.

Spot-Futures Price Spread Daily Report: According to SMM data, on February 24, the SMM Alumina Index showed a discount of 19 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On February 24, the total registered warehouse warrants for alumina increased by 895 mt from the previous trading day to 94,900 mt. In Shandong, the total registered warehouse warrants remained unchanged at 4,513 mt. In Henan, the total registered warehouse warrants also remained unchanged at 18,000 mt. In Guangxi and Gansu, the total registered warehouse warrants stayed at 0 mt. In Xinjiang, the total registered warehouse warrants increased by 895 mt to 72,300 mt.

Overseas Market: As of February 24, the FOB Western Australia alumina price was $485/mt, with ocean freight at $19.85/mt. The USD/CNY exchange rate sell price was around 7.26. This price translates to an external selling price of approximately 4,222 yuan/mt at major domestic ports, 865 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, there have been reports of minor alumina production cuts and maintenance in northern China, coupled with concentrated news of domestic alumina exports, which have boosted alumina prices and improved market sentiment. This week, spot alumina prices rebounded slightly. However, with the slight rebound in domestic spot alumina prices and the decline in overseas spot alumina prices, the domestic alumina export window has gradually closed. Currently, alumina operating capacity remains high, while the incremental demand for aluminum is limited. The fundamental structure has not yet fully shifted, and resistance at the top of alumina prices persists. In the short term, alumina prices may enter a phase of fluctuation and adjustment. Continuous attention should be paid to the alumina export window and changes in alumina operating capacity.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]