Approaching Chinese New Year, Alumina Transactions Remain Sluggish; Post-Holiday Prices Expected to Stay in a Declining Range [SMM Morning Comment on Alumina]

SMM Morning Comment on Alumina 1.27

Futures Market: In the overnight session, the most-traded alumina 2502 contract opened at 3,655 yuan/mt, reached a high of 3,682 yuan/mt and a low of 3,637 yuan/mt, and finally closed at 3,646 yuan/mt, down 9 yuan/mt or 0.25%. Open interest stood at 23,900 lots, down 3,581 lots.

Industry Updates:

1. According to SMM calculations, domestic bauxite production in January 2025 (31 days) decreased slightly by 1.4% MoM but was up 12.2% YoY. In the same period, total bauxite raw material inventory at domestic alumina refineries increased slightly by 1.7% MoM but decreased by 3.8% YoY.

2. SMM reported that starting January 25, a major alumina refinery in Shandong adjusted its purchase price for 32% ionic membrane liquid caustic soda, raising it by 20 yuan/mt from 910 yuan/mt to 930 yuan/mt on an ex-factory two-invoice basis (equivalent to 2,906 yuan/mt on a 100% basis).

3. SMM data shows that domestic metallurgical-grade alumina production in January 2025 (31 days) increased by 1.63% MoM and 12.85% YoY. As of January 24, the existing capacity of domestic metallurgical-grade alumina stood at approximately 104.02 million mt, with operating capacity up 1.43% MoM and an operating rate of 86.69%.

4. According to SMM statistics on January 24, bauxite inventory at nine domestic ports totaled 13.95 million mt, down 400,000 mt from the previous week.

5. SMM data indicates that domestic aluminum production in January 2025 (31 days) increased by 3.8% YoY but decreased by 0.3% MoM. During the month, the proportion of casting ingots increased in multiple regions, while the proportion of liquid aluminum decreased by 2.9 percentage points MoM and 1.0 percentage point YoY. Based on SMM's liquid aluminum proportion data, domestic aluminum casting ingot production in December increased by 7.3% YoY to approximately 1.13 million mt.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 a.m. on January 24, the SMM Alumina Index showed a premium of 304 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 24, the total registered warehouse warrants for alumina decreased by 1,504 mt from the previous trading day to 32,400 mt. In Shandong, the total registered warehouse warrants remained unchanged at 901 mt; in Henan, unchanged at 12,000 mt; in Guangxi, unchanged at 0 mt; in Gansu, unchanged at 0 mt; and in Xinjiang, decreased by 1,504 mt to 1.95 mt.

Overseas Market: As of January 24, the FOB Western Australia alumina price was $573/mt, with an ocean freight rate of $19.95/mt. The USD/CNY exchange rate sell price was around 7.28. This translates to an external selling price of approximately 4,955 yuan/mt at major domestic ports, which is 1,015 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, weekly operating rates for alumina have continued to fluctuate at highs, with no significant reduction in alumina supply observed. As the Chinese New Year break approaches, spot alumina transactions have been relatively sluggish. Overall, spot alumina transaction prices in north China have seen a significant narrowing in declines, with current transaction prices approaching the theoretical marginal cost of alumina production in the region. In south China, spot alumina prices have accelerated their decline, and the price difference between north and south China has narrowed during the week. Additionally, cost support for alumina has gradually emerged; however, bauxite suppliers' quotations have declined, suggesting that alumina cost support may shift downward in the future. In the short term, no large-scale production cuts for alumina have been reported, and the spot alumina market is expected to remain relatively well-supplied. Post-holiday prices are expected to maintain a 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 unrelated to SMM.]