Supply and Demand Slightly Improve, Market's Willingness to Purchase at High Prices Remains Low [SMM Morning Comment on Alumina]

SMM Alumina Morning Comment 12.30

Futures Market: Last Friday's night session saw the most-traded alumina 2502 contract open at 4,750 yuan/mt, reaching a high of 4,812 yuan/mt and a low of 4,743 yuan/mt, before closing at 4,761 yuan/mt, up 11 yuan/mt or 0.23%. Open interest stood at 145,000 lots, an increase of 2,745 lots.

Industry Dynamics:

1. In December 2024 (31 days), domestic aluminum production increased by 4.13% YoY. From January to December 2024, cumulative production at domestic aluminum smelters rose by 3.89% YoY.

2. According to SMM statistics on December 27, bauxite inventory at nine domestic ports totaled 14.84 million mt, up 140,000 mt from the previous week.

3. According to SMM statistics on December 27, alumina inventory at domestic ports totaled 96,000 mt, up 15,000 mt from the previous week.

Spot-Futures Price Spread Daily Report: According to SMM data, on December 27, the SMM alumina index showed a premium of 986 yuan/mt against the most-traded contract's latest transaction price at 11:30 a.m.

Warehouse Warrant Daily Report: On December 27, the total registered volume of alumina warehouse warrants decreased by 3,916 mt from the previous trading day to 12,000 mt. In Shandong, the total registered volume remained unchanged at 0 mt; in Henan, it also remained unchanged at 0 mt; in Guangxi, it remained unchanged at 301 mt; in Gansu, it remained unchanged at 0 mt; and in Xinjiang, it decreased by 3,916 mt to 11,700 mt.

Overseas Market: As of December 27, the FOB Western Australia alumina price was $670/mt, with an ocean freight rate of $22.45/mt. The USD/CNY exchange rate sell price was around 7.32. This price, converted to the selling price at major domestic ports, was approximately 5,807 yuan/mt, 89 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Supply side, domestic alumina operating rates remained high. Although some enterprises reduced roasting capacity due to winter environmental protection measures and maintenance, the significant profitability of alumina has spurred high enthusiasm for production increases among alumina refineries, with some refineries slightly raising their operating capacity. Demand side, downstream aluminum smelters faced severe losses, with some aluminum plants in south China undergoing minor maintenance and production cuts. Additionally, some aluminum plants had planned to complete technological transformations and resume production, but progress stalled due to high raw material costs, leading to a slight decrease in demand. Overall, the tight supply situation for alumina has improved compared to before. However, buyers and sellers of alumina are still in a phase of negotiation. Suppliers maintain a sentiment to stand firm on quotes, while downstream players primarily execute long-term contracts and restock on dips, showing low acceptance of high prices. In the short term, prices are expected to remain stable with a slight downward trend.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]