Supply Surplus Persists, Alumina Continues to Fluctuate [Institutional Commentary]

Alumina fluctuated upward, with the AO2505 contract closing at 2,837 yuan/mt overnight, up 0.6%, and open interest decreased by 3,555 lots to 222,000 lots. SHFE aluminum was in the doldrums, with the AL2506 contract closing at 19,755 yuan/mt overnight, with no change. Open interest decreased by 1,620 lots to 212,000 lots. Spot side, SMM alumina prices slightly rebounded to 2,883 yuan/mt. Spot premiums for aluminum ingots narrowed to 40 yuan/mt, while Foshan A00 prices fell back to 19,830 yuan/mt, at a discount of 10 yuan/mt to Wuxi A00. Downstream aluminum billet processing fees remained stable in most regions, with Guangdong and Wuxi seeing a full-line reduction of 10-20 yuan/mt. Aluminum rod 1A60 processing fees remained stable, while 6-series and 8-series processing fees held steady, and low-carbon aluminum rod processing fees decreased by 51 yuan/mt.

The scale of alumina maintenance expanded but the duration continued to shorten, providing limited relief to the surplus situation. The market is expected to continue fluctuating, with range trading and shorting distant contracts being the main strategies, while monitoring cost support and marginal supply increments. Factors such as disrupted shipments in Xinjiang and downstream buying the dip and restocking led to a record-high weekly destocking volume of aluminum ingots this year, but expectations of a slowdown as the peak season nears its end remain. As the tariff policy adjustment phase begins, aluminum prices have entered a range consolidation mode. It is recommended to focus on selling high and buying low within the range.