Supply Tightens but Fails to Reduce Inventory, Alumina Rebound Insufficient [Institutional Commentary]

Alumina was in the doldrums, with the AO2505 contract closing at 2,816 yuan/mt overnight, down 0.81%, and open interest decreased by 744 lots to 132,000 lots. SHFE aluminum was also in the doldrums, with the AL2505 contract closing at 19,680 yuan/mt overnight, down 0.18%, and open interest increased by 3,445 lots to 204,000 lots. On the spot side, SMM alumina prices continued to retreat to 2,868.5 yuan/mt. Spot premiums for aluminum ingots shifted from 20 yuan/mt to a discount of 40 yuan/mt, with Foshan A00 prices rebounding to 19,740 yuan/mt, on par with Wuxi A00. Downstream aluminum billet processing fees remained stable in Henan, increased by 20 yuan/mt in Linyi, and decreased in Xinjiang, Baotou, Nanchang, Wuxi, and Guangdong by 30-120 yuan/mt. Aluminum rod 1A60 processing fees remained stable, while 6/8-series processing fees were unchanged, and low-carbon aluminum rod processing fees increased by 179 yuan/mt. Alumina experienced concentrated maintenance, but both warrants and raw material inventories at aluminum plants were on the rise.

Alumina supply tightened but failed to reduce inventory, with the decline halting but the rebound insufficient. The U.S. announced exemptions for some products from reciprocal tariffs, alleviating market panic sentiment and gradually returning to a fundamental perspective. After a sharp decline in aluminum prices, downstream restocking volumes significantly increased, and aluminum prices rebounded amid destocking. Due to tariffs, some end-users adopted a cautious wait-and-see approach, making it relatively difficult to negotiate new export orders at this stage. Additionally, with the distributed PV installation rush approaching the 430 period, consumption faces gradual deceleration pressure. Spot prices have shifted from premiums to discounts, and excessive rush to buy amid continuous price rises should be approached with caution.