Overseas Low-Priced Transactions Cause a Short-Term Downward Trend in Spot Alumina Prices [SMM Morning Comment on Alumina]

Published: Jan 14, 2025 08:53

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[SMM Morning Comment on Alumina: Overseas Low-Price Transactions, Short-Term Spot Alumina Prices Show a Downward Trend] Recently, the weekly operating rate of alumina has continued to increase slightly, while demand remains 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 circulation of spot alumina cargoes in the market. 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 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 1.14

Futures Market: Last Friday, the most-traded alumina 2502 futures contract opened at 4,055 yuan/mt, with a high of 4,102 yuan/mt and a low of 4,055 yuan/mt, finally closing at 4,087 yuan/mt, up by 33 yuan/mt or 0.81%. Open interest stood at 86,227 lots, an increase of 1,770 lots.

Industry Updates:

1. Overseas Alumina Transactions: On January 10, 30,000 mt of alumina was traded overseas for April delivery, with the seller choosing the source. The transaction prices were $610/mt FOB Western Australia, $607/mt FOB Eastern Australia, or $616/mt FOB India/Indonesia.

2. Overseas Alumina Transactions: On January 13, 30,000 mt of alumina was traded overseas at $672/mt FOB Vila do Conde, Brazil, for late February shipment.

3. According to SMM, starting January 14, a major alumina refinery in Shandong adjusted its purchase price for 32% ionic membrane liquid caustic soda, increasing it by 20 yuan/mt from the previous 810 yuan/mt to 830 yuan/mt ex-factory under the two-invoice system (equivalent to 2,594 yuan/mt on a 100% basis).

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 a.m. on January 13, the SMM alumina index showed a premium of 1,088 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 13, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 18,300 mt. In Shandong, the total registered warehouse warrants remained at 0 mt; in Henan, they increased by 3,003 mt to 3,003 mt; in Guangxi, they remained at 301 mt; in Gansu, they remained at 0 mt; and in Xinjiang, they remained at 15,000 mt.

Overseas Market: As of January 13, the FOB Western Australia alumina price was $640/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 5,578 yuan/mt at major domestic ports, which is 379 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 remains 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 in circulation. Spot transactions have seen a wider discount against online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, leading to an anticipated increase in supply. On the demand side, aluminum operating rates remain relatively stable. The alumina market is expected to maintain a slight surplus in the short term, and spot alumina prices may continue their 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.]

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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