Bauxite and Alumina Monthly Review: Spot Alumina Prices Plummet, Ore Prices Under Pressure to Pull Back [SMM Analysis]

SMM, Feb 8:

Since January 2025, domestic spot alumina prices have experienced a sharp decline. As of February 7, the SMM Alumina Index stood at 3,688 yuan/mt, down 1,987 yuan/mt from the January 2 SMM Alumina Index price of 5,675 yuan/mt, a drop of 35.0%.

Spot alumina prices in northern regions fell more significantly than in southern regions, with northern prices first reaching theoretical marginal costs.

As of February 7, alumina prices in Shandong were reported at 3,600 yuan/mt, down 2,090 yuan/mt from January 2, a decrease of 36.7%; in Shanxi, prices were also at 3,600 yuan/mt, down 2,050 yuan/mt, a drop of 36.3%; in Henan, prices were at 3,625 yuan/mt, down 2,005 yuan/mt, a decrease of 35.6%; in Guangxi, prices were at 3,925 yuan/mt, down 1,805 yuan/mt, a drop of 31.5%; and in Guizhou, prices were at 3,950 yuan/mt, down 1,790 yuan/mt, a decrease of 31.2%.

The sharp decline in alumina prices saw mid-month prices drop by over 200 yuan/mt, while raw material bauxite prices only pulled back slightly. Alumina profitability narrowed rapidly, with northern spot alumina transaction prices already touching theoretical marginal production costs. As of February 7, according to SMM's daily cost model, the full cost of producing alumina using imported ore in Shanxi was 3,812 yuan/mt, resulting in a loss of 212 yuan/mt; in Henan, the full cost was 4,127 yuan/mt, with a loss of 502 yuan/mt.

Shrinking alumina profitability puts pressure on ore prices to pull back.

Spot alumina prices continued to decline, reducing alumina refineries' acceptance of high-priced imported bauxite. From late December 2024 to early January 2025, the highest transaction price for bulk Guinean bauxite reached approximately $130/mt. However, with the rapid decline in alumina prices, high-priced purchases could lead to expected losses, resulting in cautious procurement sentiment and pressure on ore prices. Bauxite holders also lowered their offer prices, with limited transactions occurring around $120/mt. By the Chinese New Year, the lowest offer prices from holders had dropped below $110/mt, though still higher than buyers' target prices, with no actual transactions reported. SMM's CIF price for Guinean bauxite saw a slight pullback compared to earlier levels.

For domestic ore, the continued decline in spot alumina prices led northern alumina refineries to first lower their procurement prices for domestic bauxite. Entering February, northern domestic bauxite prices dropped slightly by 5-10 yuan/mt.

SMM Commentary: Entering February, buyers and sellers of imported bauxite have yet to reach an agreement on prices, and negotiations are expected to continue. However, spot alumina prices are expected to continue their downward trend. With weakened alumina profitability, bauxite prices are expected to fluctuate downward. As spot alumina prices continue to decline, cost support is expected to become increasingly evident. Further attention is needed on changes in spot bauxite prices.

(The above information is based on market data and comprehensive assessments by the SMM research team. The information provided herein is for reference only and 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 unrelated to SMM.)

Data source: SMM Click on the SMM Industry Database for more information

(Mingxin Guo 021-51595800)