Domestic Alumina Operating Capacity Increases; Recently, Spot Alumina Fluctuates Downward [SMM Alumina Morning Comment]

Published: Feb 7, 2025 09:33

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[SMM Morning Comment on Alumina: Domestic Alumina Operating Capacity Increases, Recent Spot Alumina Fluctuates Downward] Overall, in the short term, alumina operating capacity is expected to continue increasing, and the spot alumina market remains relatively ample compared to earlier periods, with spot transaction prices continuing to decline. In the short term, there are no clear expectations for production cuts in alumina, and supply remains stable. However, some aluminum production cuts or technological transformation capacities in south-west China may gradually resume production, leading to a slight rebound in demand, though it is unlikely to reverse the relatively ample supply in the spot alumina market. Continuous attention should be paid to bauxite prices and supply conditions.

SMM Alumina Morning Comment 2.7

In the overnight session, the most-traded alumina 2505 futures contract opened at 3,490 yuan/mt, reached a high of 3,528 yuan/mt, a low of 3,489 yuan/mt, and closed at 3,508 yuan/mt, up 0.52%. Open interest increased by 5,965 lots to 127,000 lots.

Industry Updates:

1. On February 5, an overseas transaction of 31,500 mt of alumina was concluded at a transaction price of $561/mt CIF Kakinada, India, sourced from Eastern Australia, with shipment scheduled for late March.

2. According to SMM data, as of this Thursday, the national weekly operating rate of alumina decreased by 0.36 percentage points compared to the week before the holiday, reaching 86.94%. Among them, the weekly operating rate of alumina in Shandong decreased by 1.35 percentage points to 92.66%, mainly due to the increase in existing capacity.

Spot-Futures Price Spread Daily Report: According to SMM data, on February 6, the SMM alumina index showed a premium of 255 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On February 6, the total registered warehouse warrants for alumina decreased by 3,002 mt compared to the previous trading day, reaching 25,200 mt. In Shandong, the total registered warehouse warrants remained unchanged at 2,410 mt. In Henan, the total registered warehouse warrants decreased by 2,098 mt to 6,604 mt. In Guangxi, the total registered warehouse warrants remained unchanged at 0 mt. In Gansu, the total registered warehouse warrants also remained unchanged at 0 mt. In Xinjiang, the total registered warehouse warrants decreased by 904 mt to 1.62 mt.

Overseas Market: As of February 6, the FOB Western Australia alumina price was $531/mt, with an ocean freight rate of $19.30/mt. The USD/CNY exchange rate sell price was around 7.31. This price translates to an external selling price of approximately 4,624 yuan/mt at major domestic ports, which is 822 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Overall, in the short term, alumina operating capacity continues to increase, and the alumina spot market supply is relatively ample compared to earlier periods, with spot transaction prices continuing to decline. In the short term, there are no clear expectations for alumina production cuts, and supply remains stable. However, some aluminum production cuts or technological transformation capacities in south-west China may gradually resume production, leading to a slight rebound in demand. Nevertheless, this is unlikely to reverse the relatively ample supply situation in the alumina spot market. Continuous attention should be paid to bauxite prices and supply conditions.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not replace independent judgment with this information. 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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