Domestic Spot Alumina Circulation Increases, Spot Prices Expected to Continue Declining in the Short Term [SMM Morning Comment on Alumina]

Published: Jan 13, 2025 08:56

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[SMM Morning Comment on Alumina: Domestic Spot Alumina Supply Increases, Spot Prices Expected to Continue Declining in the Short Term] Recently, the weekly operating rate of alumina has continued to rise slightly, while demand remains relatively stable. With reports of low-price transactions emerging in the market, some suppliers have become more active in selling, leading to an increase in the circulation of spot alumina in the market. Spot transactions have seen a larger discount compared to online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, with supply anticipated to increase. On the demand side, aluminum operating rates remain relatively stable. The fundamentals of alumina are expected to maintain a slightly surplus pattern, and spot alumina prices are likely to continue their downward trend in the short term.

SMM Morning Comment on Alumina 1.13

Futures Market: Last Friday, the most-traded alumina 2502 futures contract opened at 4,062 yuan/mt, with a high of 4,132 yuan/mt and a low of 4,040 yuan/mt, and finally closed at 4,093 yuan/mt, up 31 yuan/mt or 0.76%. Open interest stood at 90.115 million lots, down 1,478 lots.

Industry Dynamics:

1. According to SMM statistics on January 10, domestic port alumina inventory totaled 20,000 mt, down 28,000 mt from the previous week.

2. According to SMM statistics on January 10, bauxite inventory at nine domestic ports totaled 14.23 million mt, up 250,000 mt from the previous week.

3. Overseas Alumina Transactions: On January 10, 30,000 mt of alumina was transacted overseas at a price of $640/mt FOB Bunbury, Western Australia, for February shipment.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 on January 10, the SMM alumina index showed a premium of 1,212 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 10, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 15,300 mt. The total registered warehouse warrants in Shandong, Henan, Guangxi, Gansu, and Xinjiang regions also remained unchanged at 0 mt, 0 mt, 301 mt, 0 mt, and 12,300 mt, respectively.

Overseas Market: As of January 10, the FOB Western Australia alumina price was $681/mt, with an ocean freight rate of $21.90/mt. The USD/CNY exchange rate sell price was around 7.35. This price translates to an external selling price of approximately 5,919 yuan/mt at major domestic ports, which is 598 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, the weekly operating rate of alumina has continued to increase slightly, while demand has remained relatively stable. With low-price transactions gradually emerging in the market, some suppliers have become more active in selling, leading to an increase in the availability of spot alumina. Spot transactions have seen a wider discount compared to online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, with supply anticipated to increase. On the demand side, aluminum operating rates remain relatively stable. The alumina market is expected to maintain a slight surplus in fundamentals, and spot alumina prices may continue their downward trend in the short term.

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

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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