The Total Registered Warrants Exceed 200,000 mt; Bauxite and Alumina Prices May Both Fluctuate Downward in the Short Term [SMM Alumina Morning Comment]

SMM Morning Comment on Alumina, 3.13

Futures Market: During the night session, the most-traded alumina 2505 futures contract opened at 3,180 yuan/mt, with a high of 3,184 yuan/mt and a low of 3,142 yuan/mt, closing at 3,152 yuan/mt, down 17 yuan/mt or 0.55%. Open interest stood at 214,000 lots.

Ore Market: As of March 11, the SMM Imported Bauxite Index was reported at $93.39/mt, down $1.35/mt from the previous trading day. This was mainly due to recent transactions in the Guinean bauxite market at $92-95/mt, with some buyers' target prices dropping to $80-85/mt and a few supplier offers below $90/mt. The SMM Imported Bauxite Index price was adjusted downward accordingly. The CIF average price of Guinean bauxite was $91/mt, down $2/mt from the previous trading day. The CIF average price of Australian low-temperature bauxite was $87/mt, down $4/mt, while the CIF average price of Australian high-temperature bauxite was $81/mt, down $5/mt.

Spot Alumina: On Wednesday, some spot alumina transactions were recorded, with shipments flowing to aluminum smelters in north-west China at an ex-factory price of 3,200 yuan/mt. In Shandong, 5,000 mt of spot alumina was transacted at 3,260 yuan/mt.

Industry News:

1. Emirates Global Aluminium (EGA) reported an adjusted EBITDA of $2.5 billion in 2024, up 20% YoY. Due to the Guinean export ban, annual bauxite production fell by 3.3 million mt to 10.8 million mt. Alumina production increased by 600,000 mt to 2.54 million mt, meeting approximately 49% of demand. Liquid aluminum production rose by 30,000 mt to 2.69 million mt. EGA accelerated its low-carbon aluminum and recycled aluminum initiatives, with CelestiAL solar aluminum production reaching 80,000 mt. The company also acquired Germany's Leichtmetall and the US's Spectro Alloys. Additionally, EGA is constructing the UAE's largest aluminum recycling plant, expected to commence operations in H1 2026. Due to the Guinean bauxite export suspension, EGA recorded an asset impairment of $488 million, with net profit falling to $715 million. Nevertheless, operating cash flow reached $2.3 billion, and the company distributed $1 billion in dividends for the second consecutive year.
2. The Trump administration officially imposed a 25% tariff on global steel and aluminum imports today, affecting approximately £350 million of the UK's annual steel exports. UK Business Secretary Reynolds expressed disappointment but refrained from implementing countermeasures, continuing negotiations with the US. The EU announced retaliatory tariffs of €26 billion on US goods starting April 1. The UK steel industry warned that the tariffs would impact jobs and harm the US defense and aerospace supply chains. The market reacted negatively to the tariff policy, with US stock market value evaporating by over $4 trillion, the US dollar weakening, and recession risks increasing.
3. The White House confirmed that the Trump administration would maintain a 25% tariff on Australian steel and aluminum products without exemptions. Prime Minister Albanese criticized the move as "unreasonable," while Australia continued efforts to reverse the decision. Trump's trade advisor Navarro accused Australia of abusing previous exemption policies, emphasizing that the new tariff policy would have no exceptions. Australian steel and aluminum exports to the US account for less than 0.2% of total exports, with limited impact. The government stated it would not impose retaliatory tariffs to avoid driving up domestic prices.
4. A Canadian official revealed that Canada would announce retaliatory tariffs of C$29.8 billion on the US on Wednesday in response to President Trump's steel and aluminum tariffs.
5. The European Commission announced on March 12 that it would impose retaliatory tariffs worth €26 billion on US goods starting next month in response to the 25% tariffs on all imported steel and aluminum. European Commission President Ursula von der Leyen and Commissioner Maroš Šefčovič, responsible for trade and economic security, issued a joint statement indicating that the measures would be implemented in two phases, with the first phase starting on April 1 and becoming fully effective by April 13. The EU reiterated its openness to negotiations, emphasizing that such tariffs amid global geopolitical and economic uncertainties would not serve common interests but rather increase economic burdens. Von der Leyen instructed Šefčovič to restart talks with the US to seek more effective solutions. Earlier, on February 10, President Trump officially implemented the 25% tariffs on all imported steel and aluminum products, removing exemption quotas and policies for some trade partners. The statement also mentioned that Trump might consider imposing tariffs on other products, such as automobiles. Data showed that 25% of Europe's steel exports go to the US market, and the EU's automotive industry could also face potential impacts.

Spot-Futures Price Spread Daily Report: According to SMM data, on March 12, the SMM Alumina Index showed a premium of 171 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warrant Daily Report: On March 12, the total registered warrants for alumina increased by 8,426 mt from the previous trading day to 207,500 mt. In Shandong, the total registered warrants remained unchanged at 4,513 mt. In Henan, the total registered warrants increased by 3,304 mt to 28,200 mt. In Guangxi, the total registered warrants remained unchanged at 20,100 mt. In Gansu, the total registered warrants remained unchanged at 18,300 mt. In Xinjiang, the total registered warrants increased by 5,122 mt to 136,400 mt.

Overseas Market: As of March 12, the FOB Western Australia alumina price was $472/mt, with ocean freight rates at $20.05/mt. The USD/CNY exchange rate selling price was around 7.26. This price translates to an external selling price of approximately 4,118 yuan/mt at major domestic ports, 776 yuan/mt higher than domestic alumina prices. The alumina import window remained closed. Based on SMM Shandong alumina prices, considering transportation and port miscellaneous fees, the domestic alumina export cost was approximately $480/mt, with the export window remaining closed.

Summary: Recently, the tug-of-war between alumina buyers and sellers continued, with sporadic spot transactions in the alumina spot market. Transaction prices saw further slight declines, with the center around 3,200-3,300 yuan/mt. The domestic alumina export window remained closed, and the total registered warrants in alumina futures delivery warehouses exceeded 200,000 mt. Subsequent alumina exports and warehouse transfers may struggle to provide sustained demand. On the fundamentals side, short-term alumina operating capacity is expected to fluctuate, with no significant decline anticipated in total operating capacity. The alumina fundamentals are expected to maintain a slight surplus, with spot alumina prices likely to fluctuate downward in the short term.

[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]