After falling for nearly two consecutive months, alumina prices finally started to rise. Will the upward momentum be stable? [SMM Analysis]

After nearly two months of continuous decline, domestic spot alumina prices stabilized and rose recently. The SMM weighted average alumina price rose 11 yuan/mt from a week ago to 3,308 yuan/mt. SMM will explain alumina price trend and reasons in the past two months from the following time points.
From late February to the end of March, alumina prices fell under the market expectation of "strong supply and weak demand"
The alumina market in south China outperformed that in the north.
Given that the industry profits were considerable, alumina companies were willing to increase production. Due to the increase in supply brought about by the recent production resumption, out of risk aversion, the north China spot market were dominated by discount transactions amid bearish sentiment, and spot prices dropped.
In the first half of April, spot alumina prices in north China stabilised
Driven by SHFE Aluminum and bullish macro sentiment, alumina futures prices rose, and the market demand for delivery brand cargoes somehow boosted the spot alumina prices in north China, which stopped falling and stabilized in the week.
In southwest China, the first batch of aluminium capacity in Yunnan was still resuming. The stable short-term demand somehow supports spot alumina prices in southwest China.
In late April, the reluctance of holders to sell became stronger, demand remained stable, and the price rebound momentum was evident.
Based on the fact that the spot supply of alumina in the north and south was in a tight balance, the opening of the spot-futures arbitrage window brought additional demand growth to the spot market. According to SMM research, the transaction price of delivery brand cargoes during this period has a premium of 90-100 yuan/ton over that of non-delivery products. In addition, after the production resumption of alumina enterprises, some finished products did not meet national standards due to the diversification of ore use and production line adjustments. The effective spot supply decreased during the period, the reluctance of holders to sell became stronger, and the price center of spot transaction moved up significantly compared with the previous period.
Price forecast
The recent production resumption of alumina enterprises has been relatively slow, and the resumption plans of some enterprises have also been delayed. On the demand, Yunnan's steady production resumption will remain stable in the short term, and the tight balance of the spot market will continue during this period. SMM expects that before domestic mines resume production on a large scale, alumina prices may move rangbound.