During the Chinese New Year, alumina transactions were sluggish, and prices are expected to continue their downward trend [SMM Morning Comment on Alumina].

SMM Morning Comment on Alumina for February 5

Futures Market: Before the holiday, the most-traded alumina 2505 futures contract opened at 3,586 yuan/mt, reached a high of 3,628 yuan/mt, a low of 3,570 yuan/mt, and closed at 3,606 yuan/mt, up 20 yuan/mt or 0.56%. Open interest was 95,800 lots, down 2,105 lots.

Industry Dynamics:

1. According to SMM statistics, as of January 27, domestic aluminum ingot inventory in major consumption areas stood at 492,000 mt, up 32,000 mt WoW; aluminum billet inventory in major consumption areas was 222,800 mt, up 22,800 mt from last Thursday.
2. SMM data shows that in January 2025, the average tax-inclusive full cost of China's aluminum industry was 19,989 yuan/mt, down 5.3% MoM but up 27% YoY, mainly due to the sharp pullback in spot alumina prices during the period.
3. On January 24, 30,000 mt of alumina was traded overseas at a transaction price of $540/mt FOB Bunbury, Western Australia, for March shipment.

Warehouse Warrant Daily Report: On January 27, the total registered warehouse warrants for alumina decreased by 4,195 mt from the previous trading day to 28,200 mt. In Shandong, the total registered warehouse warrants for alumina increased by 1,509 mt to 2,410 mt; in Henan, they decreased by 3,301 mt to 8,702 mt; in Guangxi and Gansu, they remained unchanged at 0 mt; in Xinjiang, they decreased by 2,403 mt to 1.71 mt.

Overseas Market: As of January 27, the FOB Western Australia alumina price was $540/mt, with an ocean freight rate of $19.95/mt. The USD/CNY exchange rate sell price was around 7.29, translating to an external selling price of approximately 4,692 yuan/mt at major domestic ports, which is 823 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, the weekly operating rate of alumina has continued to fluctuate at highs, and no significant reduction in alumina supply has been observed. During the Chinese New Year, spot alumina transactions were relatively sluggish, with cost support evident. In north China, the decline in spot alumina transaction prices has significantly narrowed, 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 narrowed during the week. However, bauxite suppliers have lowered their quotations, and alumina cost support is expected to shift downward in the future. In the short term, no large-scale expectations for production cuts in alumina have been identified, and the spot alumina market is expected to remain relatively ample. 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.]