SMM Spot Aluminum Midday Review: Extremely Sluggish Market Trading on the Last Trading Day Before the Holiday

【Spot Alumina Prices Plunge, Aluminum Costs in February May Pull Back by Nearly 2,500 Yuan/mt】SMM January 27 News: According to SMM data, the average tax-inclusive full cost of China's aluminum industry in January 2025 was 19,989 yuan/mt, down 5.3% MoM, up 22.7% YoY, mainly due to the sharp pullback in spot alumina prices during the period. The average spot price of SMM A00 aluminum in January 2025 was approximately 19,970 yuan/mt (December 26, 2024 - January 24, 2025). The average loss in the domestic aluminum industry was about 19 yuan/mt, with the loss narrowing by 892 yuan/mt MoM. The industry as a whole was close to the break-even point.

[SMM Morning Comment on Alumina: Sluggish Transactions Near Chinese New Year, Post-Holiday Prices Expected to Remain in a Declining Range] Recently, weekly operating rates for alumina have continued to fluctuate at highs, with no significant reduction in alumina supply observed. As the Chinese New Year break approaches, spot alumina transactions have been relatively sluggish. Overall, spot alumina transaction prices in north China have seen a noticeable narrowing in their decline, with current transaction prices nearing the theoretical marginal cost of alumina production in the region. Meanwhile, spot alumina prices in south China have accelerated their decline, and the price difference between north and south China has shown a narrowing trend during the week. Additionally, the cost support for alumina is gradually becoming evident; however, current bauxite supplier quotations have decreased, suggesting that future cost support for alumina may weaken. In the short term, no large-scale expectations for production cuts in alumina have been reported, and the spot market for alumina is expected to remain relatively ample. Post-holiday prices are expected to maintain a downward trend in the short term.

[SMM Aluminum Morning Meeting Summary: SHFE Aluminum Center Shifted Downward Before Holiday, Sluggish Market Transactions as Downstream Entered Holiday] On the macro front, the market is betting that US tariffs may not be as large-scale or widespread as previously feared, leading to a weaker US dollar. On the fundamentals side, supply-side disruptions have decreased, and domestic aluminum operating capacity in February is expected to remain stable. The cost side of the aluminum industry has significantly eased, with the immediate full average cost dropping to 18,126 yuan/mt, further weakening cost-side support.

[SMM Analysis: Aluminum Foil Export Volume Drops Significantly MoM, Long-Term Overseas Demand Remains Stable] With the cancellation of export tax rebates and the looming threat of increased tariffs in some countries, relevant enterprises generally believe that aluminum foil export volumes are unlikely to see significant growth in the coming months. Fortunately, aluminum foil is primarily used in food packaging, and the dietary habits of European and American countries make household foil and other aluminum foil products essential in these regions. Therefore, while there is no significant expectation for a rise in aluminum foil exports, there remains a stable overseas demand base, and the likelihood of a sustained sharp decline is expected to be low.

[SMM Analysis: Aluminum Plate/Sheet and Strip Exports Decline as Expected, Future Prospects Remain Promising] In 2024, cumulative exports of aluminum plate/sheet and strip reached 3.4256 million mt, up 23.53% YoY. The significant YoY increase was mainly due to overseas customers depleting raw material inventories to relatively low levels, a rebound in purchase willingness, and a partial recovery in demand from some overseas end-use markets compared to 2023.

[SMM Analysis: Significant Increase in Aluminum Wheel Exports to the US and Mexico in December Amid Trade War Concerns] Customs data showed that in December 2024, China exported a total of 75,500 mt of aluminum alloy wheel hubs, up 4% YoY and MoM. By export destination, the top five export destinations for aluminum wheels in December were the US, Japan, Mexico, South Korea, and Thailand. Exports to these five countries accounted for 29%, 19%, 11%, 9%, and 5% of the total aluminum wheel exports, respectively. Compared to the previous period...

SMM January 26 News: According to the latest weekly survey data from SMM, the weekly operating rate of aluminum billets recorded 64.45% this week, down 0.44% WoW. Due to the re-signing of liquid aluminum long-term contracts by aluminum billet manufacturers at the year-end, coupled with the off-season impact leading to significant sales pressure, the operating rate of aluminum billet manufacturers declined under resistance. However, considering the pressure of liquid aluminum alloying, some aluminum plants in certain regions offered discounts on liquid aluminum during the Chinese New Year, resulting in a counter-trend increase in the operating rate of some aluminum billet enterprises at the year-end. By region, the operating rate in Guizhou fell 29.31% WoW to 37.14%; in Guangxi, it dropped 10.61% WoW to 48.53%; in Yunnan, it decreased 9.32 to 70.16%; while in Shandong, it rose 9.39 to 74.17%.

According to customs data, aluminum wire and cable exports in December 2024 reached 26,700 mt, marking a significant rebound at year-end, up 59% MoM from November exports and up 57% YoY from November 2023 exports. From January-December, domestic aluminum wire and cable exports totaled 195,300 mt, an increase of 1.83% YoY compared to the full-year 2023 total of 191,700 mt. (The above data is based on codes 76141000 and 76149000.)

SMM, January 24: According to SMM estimates, China's bauxite production in January 2025 (31 days) saw a slight decrease of 1.4% MoM, up 12.2% YoY. In January 2025, the total bauxite raw material inventory at domestic alumina refineries slightly rebounded by 1.7% MoM, down 3.8% YoY.