Spot Alumina Prices Resume Downward Trend, Operating Capacity Declines but Oversupply Pattern Remains Unchanged

SMM, March 13:

After a brief period of stabilization, China’s spot alumina prices have resumed their downward trajectory. From last Thursday to Friday, sporadic transactions emerged in the spot alumina market, with prices in northern China generally ranging from 3,200 to 3,300 yuan/mt. As spot alumina prices decline, the industry's average profit margin has narrowed to approximately 100 yuan/mt, with some alumina refineries experiencing losses. Under significant cost pressures, several refineries in northern China have implemented production cuts.

According to SMM data, as of this Thursday, the total installed capacity for metallurgical-grade alumina nationwide stood at 105.02 million mt/year, unchanged week-over-week (WoW), while the operating capacity decreased to 88.26 million mt/year, a reduction of 860,000 mt WoW. Consequently, the national weekly operating rate for alumina dropped by 0.8 percentage points WoW to 84.04%. Despite the decline in operating rates, the oversupply situation in the alumina market persists.

SMM data indicates that as of this Thursday, the operating capacity of China’s aluminum was approximately 43.78 million mt/year. Based on an alumina consumption ratio of 1.925, balanced demand corresponds to an annual operating capacity of about 84.28 million mt/year, which is significantly lower than the current weekly operating capacity of alumina. In terms of imports and exports, both the China’s alumina import and export windows remain closed. While overseas alumina supply does not exacerbate the China’s surplus, it also fails to provide additional demand.

As of this Thursday, SMM's FOB price for Western Australian alumina was reported at $425/mt, a decrease of $47/mt WoW. The China’s alumina import loss narrowed from $750/mt to $413/mt. Meanwhile, the China’s alumina export window remains completely closed. Taking into account the recent spot transaction price of alumina in Shandong at 4,260 yuan/mt, along with freight, port charges, and other costs, the China’s alumina export cost is approximately $470/mt, which is $45/mt higher than the latest FOB transaction price of Western Australian alumina. As a result, China’s alumina export volumes may decrease in the future.

Overall, the fundamental oversupply in the alumina market continues, and spot alumina prices are likely to experience further downward fluctuations in the short term.