Countdown to 2024: How Are the 2025 Aluminum Ingot Long-Term Contract Negotiations Progressing? [SMM Analysis]

As 2024 draws to a close, the long-term contract delivery cycle for most domestic aluminum ingots has also concluded. Some publicly listed firms and state-owned enterprises need to settle accounts and will begin executing the 2025 long-term contract cycle starting January 2, 2025. Currently, the market is focusing on the signing of 2025 long-term contracts. According to the latest market updates from SMM, the progress of long-term contract negotiations varies across regions, reflecting the complex interplay of market supply and demand, regional differences, and corporate expectations. In east China, mainstream transactions among traders are based on SMM A00 aluminum prices at parity to a premium of 10 yuan/mt, rising slightly by 5-10 yuan/mt compared to 2024. This region is dominated by state-owned enterprises, with flexible inter-regional allocation of long-term and spot orders. The expected signing volume is projected to remain flat or decline slightly compared to 2024. In central China, the mainstream price for 2025 long-term contracts between aluminum plants and traders is SMM A00 aluminum at a discount of 70 yuan/mt for self pick-up, up by approximately 10 yuan/mt from 2024. Some contracts are priced at parity to a premium of 10 yuan/mt for SMM A00 aluminum in central China. Currently, negotiations with downstream aluminum processing enterprises are quite tense, with significant price disagreements between buyers and sellers. The signing volume is expected to decline. In south China, the 2025 long-term contract offers are based on SMM A00 aluminum in south China or Nanchu at a premium of 5-10 yuan/mt for self pick-up, up by about 5 yuan/mt from 2024. The signing volume is expected to remain flat or slightly lower than in 2024. In north China, the 2025 long-term contract price is SMM A00 aluminum at a premium of 50 yuan/mt for self pick-up, increasing by 20 yuan/mt compared to 2024. The signing volume is expected to decrease by approximately 40%. In north-east China, the contract price is SMM A00 aluminum at a premium of 30-40 yuan/mt for self pick-up, remaining unchanged from 2024. The signing volume is expected to decline slightly. In south-west China, the 2025 contract price is SMM A00 aluminum at a premium of 0-30 yuan/mt for self pick-up, with the signing volume also expected to decline slightly. In 2025, the domestic aluminum supply side is expected to approach its ceiling, with production growth slowing to around 2%. Under policies requiring the proportion of liquid aluminum directly alloyed to exceed 90%, aluminum ingot inventory may remain at a low level for an extended period. Sellers believe that the 2025 market will largely favor sellers. However, based on 2025 long-term contract information, most aluminum processing enterprises show low acceptance of the slight increase in long-term contract prices. The stalemate between buyers and sellers may lead to a decline in the proportion of long-term contracts. SMM attributes this to the following reasons: Ⅰ: In 2024, aluminum prices rose initially and then fell, with significant fluctuations. Some downstream enterprises may prioritize absolute prices, stockpiling during price dips, and adjusting the proportion of spot orders. Ⅱ: During the off-season, the cancellation of export tax rebates will gradually reveal its negative impact on the consumption side. Ⅲ: Enterprises may choose alternative raw materials based on their conditions. For example, in the aluminum plate/sheet, strip, and foil sector, the processing fee for large flat ingots has shown a downward trend. During the off-season, the cost may be reduced by approximately 200 yuan/mt compared to casting ingots. Ⅳ: Since 2022, Russian metals have been "shifting eastward." In 2024, under intensified new sanctions, more Russian aluminum flowed into countries including China. Due to its low-carbon attributes, Russian aluminum is expected to see a slight increase in signing volume in the Chinese market in 2025. These factors contribute to uncertainties in the signing of 2025 aluminum ingot long-term contracts, with the overall signing volume likely to decline. (The above information is based on market data collection and comprehensive evaluation by the SMM research team. The information provided herein is for reference only and does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this information for independent judgment. Any decisions made by clients are unrelated to SMM.) Data source: SMM Click on the SMM Industry Database for more information.