Spot Market Transactions Sluggish, Caustic Soda Prices Decline on the Cost Side [SMM Alumina Morning Comment]

SMM Morning Comment on Alumina for February 26

Futures Market: During the night session, the most-traded alumina 2505 futures contract opened at 3,405 yuan/mt, reached a high of 3,428 yuan/mt, a low of 3,342 yuan/mt, and closed at 3,355 yuan/mt, down by 36 yuan/mt or 1.05%. The open interest stood at 169,000 lots.

Ore Market: As of February 25, the SMM imported bauxite index was reported at $96.34/mt, down by $0.08/mt from the previous trading day, mainly due to a reduction in caustic soda prices. The SMM Guinea bauxite CIF average price remained flat at $95/mt compared to the previous trading day, and the SMM Australia bauxite CIF average price also stayed unchanged at $95/mt.

Industry News:

1. Yunnan Aluminum Achieved a "Good Start" in January With Improved Cost Competitiveness in Aluminum Production. Recently, Yunnan Aluminum held an economic activity analysis meeting for January. The meeting summarized the company's performance in production, procurement, sales, and production indicators for January and arranged key tasks for the next steps. It was noted that in January, Yunnan Aluminum achieved full production of its main products, met dynamic assessment targets for cost indicators, improved cost competitiveness in aluminum production, and achieved a "substantial" good start for the first month.
2. According to foreign media reports on February 24, data released by the London Metal Exchange (LME) on Monday showed that one party had controlled up to 90% of the available aluminum inventory, valued at $500 million. The exchange does not disclose the identity of parties holding large positions, but investors or traders typically hold inventory to profit from market supply deficits or to fulfill commitments to clients.
3. A Major Alumina Refinery in Shandong Reduced Liquid Caustic Soda Purchase Prices. According to SMM, starting February 26, a major alumina refinery in Shandong adjusted the purchase price of 32% ion membrane liquid caustic soda, reducing it by 30 yuan/mt from 890 yuan/mt to an ex-factory price of 860 yuan/mt under the two-invoice system (equivalent to a price of approximately 2,688 yuan/mt on a 100% basis).

Spot-Futures Price Spread Daily Report: According to SMM data, on February 25, the SMM alumina index showed a discount of 36 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On February 25, the total registered warehouse warrants for alumina increased by 1,195 mt from the previous trading day to 96,100 mt. In Shandong, the total registered warehouse warrants remained unchanged at 4,513 mt. In Henan, the total registered warehouse warrants decreased by 3,000 mt to 15,000 mt. In Guangxi, the total registered warehouse warrants remained at 0. In Gansu, the total registered warehouse warrants increased by 1,501 mt to 1,501 mt. In Xinjiang, the total registered warehouse warrants increased by 2,694 mt to 75,000 mt.

Overseas Market: As of February 25, the FOB Western Australia alumina price was $485/mt, with an ocean freight rate of $19.85/mt. The USD/CNY exchange rate selling price was around 7.28. This price translates to an external selling price of approximately 4,233 yuan/mt at major domestic ports, which is 864 yuan/mt higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, there have been reports of minor alumina production cuts and maintenance in northern regions, coupled with concentrated news of domestic alumina exports, which have boosted alumina prices and improved market sentiment. This week, spot alumina prices rebounded slightly. However, with the slight rebound in domestic spot alumina prices and the decline in overseas spot alumina prices, the domestic alumina export window has gradually closed. Currently, operating capacity for alumina remains at a high level, while the incremental demand for aluminum is limited. The fundamental market structure has not yet been completely reversed, and resistance at the top of alumina prices persists. In the short term, alumina prices may enter a phase of fluctuation and adjustment. Continuous attention should be paid to the alumina export window and changes in operating capacity.

[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.]