The most-traded futures contract experienced volatile adjustments, and the spot price may continue to face downward pressure in the short term. [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 3.27

Futures market: In the night session, the most-traded alumina 2505 contract opened at 3,109 yuan/mt, with a high of 3,114 yuan/mt and a low of 3,068 yuan/mt, finally closing at 3,079 yuan/mt, down 20 yuan/mt or 0.65%, with an open interest of 202,000 lots.

Ore side: As of March 26, the SMM imported bauxite index stood at $93.16/mt, unchanged from the previous trading day; the SMM Guinea bauxite CIF average price was $91/mt, unchanged from the previous trading day; the SMM Australia low-temperature bauxite CIF average price was $87/mt, unchanged from the previous trading day; the SMM Australia high-temperature bauxite CIF average price was $81/mt, unchanged from the previous trading day.

Industry news: The US agreed to consult with Canada at the WTO on steel and aluminum tariffs. On March 26, 2025, the US agreed to Canada's request to initiate consultations at the World Trade Organization (WTO) over its dispute regarding the imposition of 25% tariffs on all steel and aluminum products. The tariffs were initially reinstated by the Trump administration on March 12 to restrict imports and support domestic manufacturing. This measure directly impacted Indian exports, potentially affecting $5 billion worth of engineering products and nearly $1 billion worth of aluminum exports. Despite the severe impact, India currently does not intend to take the matter to the WTO, hoping instead to resolve it through ongoing bilateral trade agreement (BTA) negotiations with the US. However, India is closely monitoring the US-Canada consultations, as it had previously filed a complaint with the WTO in 2018 when Trump first imposed similar tariffs, subsequently imposing retaliatory tariffs on 28 US goods. In 2023, under the Biden administration, India and the US reached a settlement, with the US exempting some steel and aluminum exports from tariffs, and India withdrawing some retaliatory tariffs. This time, Trump has again canceled the previous exemptions and uniformly raised aluminum tariffs to 25%, but India has not yet reinstated its previous retaliatory tariffs. India hopes to reach a temporary arrangement with the US before the first round of BTA negotiations this fall to avoid the new round of tariff countermeasures threatened by the Trump government on April 2.

Spot-futures price spread report: According to SMM data, on March 26, the SMM alumina index was at a premium of 43 yuan/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant report: On March 26, the total registered volume of alumina warrants increased by 4,482 mt to 283,800 mt compared to the previous trading day. The total registered volume of alumina warrants in Shandong remained unchanged at 4,513 mt, in Henan at 26,700 mt, in Guangxi at 49,800 mt, in Gansu at 22,500 mt, and in Xinjiang increased by 4,482 mt to 180,200 mt.

Overseas market: As of March 26, 2025, the FOB Western Australia alumina price was $400/mt, the ocean freight rate was $21.20/mt, and the USD/CNY exchange rate selling price was around 7.28, translating to a domestic mainstream port selling price of approximately 3,546 yuan/mt, 407 yuan/mt higher than the domestic alumina price, keeping the alumina import window closed. On the export side, based on the latest spot alumina transaction price in Shandong, the domestic alumina export cost is around $450/mt, lower than the overseas spot alumina price, keeping the export window closed.

Summary: The weekly operating rate of alumina has recently declined. As of last Thursday, according to SMM data, the national total operating capacity of metallurgical alumina decreased to 88.01 million mt/year, but the reduction was limited. According to SMM data, as of last Thursday, the national total operating capacity of aluminum was 43.84 million mt/year, translating to an alumina demand operating capacity of around 84.4 million mt/year. Even considering alumina net exports, the fundamentals still show a loose supply pattern. In the short term, alumina prices may continue to operate under pressure. Subsequent attention should be paid to changes in alumina operating capacity.

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