Spot Alumina Transaction Price Decline Narrows; Significant North-South Price Spread Leads to Northern Goods Transported South [SMM Alumina Morning Comment]

Published: Jan 22, 2025 09:09

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SMM Morning Comment on Alumina: Recently, the weekly operating rate of alumina has continued to increase slightly, with no significant changes on the demand side. The price center of recent spot alumina transaction prices remains on a downward trend, but the decline has narrowed compared to earlier periods. As of now, alumina capacity has not entered a large-scale loss-making state. It is expected that the short-term operating rate of alumina will remain high, with the supply and demand fundamentals maintaining a slight surplus. Overall, spot alumina prices are expected to continue their downward trend in the short term. Close attention should be paid to bauxite transaction prices, alumina costs, and overseas spot alumina prices in the near term.

SMM Morning Comment on Alumina 1.22

Futures Market: In the overnight session, the most-traded alumina 2502 contract opened at 3,832 yuan/mt, reached a high of 3,861 yuan/mt and a low of 3,804 yuan/mt, and finally closed at 3,838 yuan/mt, down 36 yuan/mt or 0.94%. Open interest stood at 72,300 lots.

Spot Alumina Transactions: In Henan, 5,000 mt of spot alumina were traded at a transaction price of 3,950 yuan/mt. In Guizhou, 3,000 mt of spot alumina were traded at 4,300 yuan/mt. In Guangxi, 10,000 mt of spot alumina (originating from Shanxi) were traded at 4,300 yuan/mt delivered to Guangxi.

Industry News:

According to SMM, starting January 22, a major alumina refinery in Shandong adjusted its purchase price for 32% ion membrane liquid caustic soda, increasing it by 20 yuan/mt from 890 yuan/mt to 910 yuan/mt under the two-invoice system (equivalent to a price of approximately 2,844 yuan/mt on a 100% basis).
On the evening of January 20, Tianshan Aluminum released its 2024 performance forecast. The announcement indicated that the company expects to achieve a net profit attributable to shareholders of publicly listed firms of 4.45 billion yuan in 2024, up 101.79% YoY. Tianshan Aluminum attributed the significant profit growth to a YoY increase of approximately 40% in the average external selling price of self-produced alumina, a YoY production increase of about 7.5%, and a substantial YoY profit growth in the alumina segment.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 on January 21, the SMM alumina index showed a premium of 515 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 21, the total registered warehouse warrants for alumina decreased by 2,701 mt from the previous trading day to 38,800 mt. In Shandong, the total registered warehouse warrants remained unchanged at 901 mt. In Henan, they remained unchanged at 12,000 mt. In Guangxi and Gansu, the total registered warehouse warrants remained at 0 mt. In Xinjiang, the total registered warehouse warrants decreased by 2,701 mt to 25,900 mt.

Overseas Market: As of January 21, the FOB Western Australia alumina price was $573/mt, with an ocean freight rate of $20.9/mt. The USD/CNY exchange rate sell price was around 7.30. This price translates to an external selling price of approximately 4,981 yuan/mt at major domestic ports, 673 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: Recently, the weekly operating rate of alumina has continued to increase slightly, while demand has shown no significant changes. The price center of spot alumina transactions has continued to decline, though the rate of decline has narrowed compared to earlier periods. As of now, alumina capacity has not entered a large-scale loss-making state. In the short term, alumina operating rates are expected to remain high, with the supply and demand fundamentals maintaining a slight surplus. Overall, spot alumina prices are expected to continue their downward trend in the short term. Close attention should be paid to bauxite transaction prices, alumina costs, and overseas spot alumina prices in the near term.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously 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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