Spot Alumina Prices Decline, Fluctuating Downward in the Short Term Amid Surplus Conditions [SMM Morning Comment on Alumina]

SMM Morning Comment on Alumina, March 17

Futures Market: On Friday night session, the most-traded alumina 2505 futures contract opened at 3,158 yuan/mt, with a high of 3,162 yuan/mt and a low of 3,120 yuan/mt, eventually closing at 3,129 yuan/mt, down 0.92%. Open interest stood at 216,000 lots, an increase of 5,946 lots. Regarding spot alumina prices, on March 14, SMM alumina was quoted at 3,305 yuan/mt, down 20 yuan/mt from the previous trading day.

Ore Market: As of March 14, the SMM imported bauxite index stood at $93.39/mt, flat from the previous trading day. The CIF average price of SMM Guinean bauxite was $91/mt, unchanged from the previous trading day, while the CIF average price of SMM Australian bauxite was $87/mt, also unchanged.

Industry News:

1. On March 14, 2025, Rusal announced its plan to acquire a 26% stake in India's Pioneer Aluminium Industries Limited for $243.75 million, with plans to gradually increase its stake to 50%. The target company, registered in India, owns and operates a metallurgical-grade alumina refinery in Andhra Pradesh with an annual capacity of 1.5 million mt. Both the seller and buyer plan to supply bauxite to the target company based on their respective equity proportions and obtain alumina in return.

2. On March 14, 2025, Ukraine and Russia reached a 30-day ceasefire agreement, sparking market expectations for a recovery in aluminum trade. Since the escalation of the Russia-Ukraine conflict in 2022, Russian aluminum exports have been hindered by Western sanctions, causing global aluminum prices to surge. Meanwhile, Ukraine's bauxite and alumina supply chains have been disrupted by the conflict, affecting global aluminum production. Russia, a major global aluminum producer, has its supply chain dominated by Rusal, but sanctions have severely impacted its trade. Although Ukraine is not a major aluminum producer, it is a key supplier of bauxite and alumina. The conflict has damaged supply chains, and the blockade of Black Sea ports has tightened global aluminum supply, exacerbating market volatility. If the ceasefire continues, Rusal's exports may see some relief, increasing the likelihood of market price stabilization. Additionally, Ukraine's resumption of exports would help repair global supply chains. However, many European officials remain cautious about Russia's intentions, and the market will need to observe whether the ceasefire can truly lead to long-term peace and economic recovery.

3. Spot Alumina: On Friday, 5,000 mt of alumina was transacted in Guizhou at a price of 3,280 yuan/mt. A Qinghai aluminum plant purchased 3,000 mt of spot alumina at a delivered price of 3,385 yuan/mt to Qinghai.

Spot-Futures Price Spread Daily Report: According to SMM data, on March 14, 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 14, the total registered volume of alumina warrants increased by 45,327 mt from the previous trading day to 257,400 mt. In Shandong, the total registered volume remained unchanged at 4,513 mt. In Henan, the total registered volume increased by 2,402 mt to 30,600 mt. In Guangxi, the total registered volume increased by 2.97 mt to 4.98 mt. In Gansu, the total registered volume remained unchanged at 16,542 mt. In Xinjiang, the total registered volume increased by 13,207 mt to 15,590 mt.

Overseas Market: As of March 14, the FOB Western Australia alumina price was $425/mt, with ocean freight rates at $20.55/mt. The USD/CNY exchange rate selling price was around 7.25. This price translates to an external selling price of approximately 3,732 yuan/mt at major domestic ports, 427 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: Recently, the tug-of-war between buyers and sellers in the alumina market has continued. The spot alumina market saw sporadic transactions, with transaction prices showing a further slight decline, centering around 3,200-3,300 yuan/mt. The domestic alumina export window remains closed, and the total registered volume of alumina warrants in delivery warehouses has exceeded 200,000 mt. Subsequent alumina exports and transfers to delivery warehouses may struggle to provide sustained demand. Fundamentals side, in the short term, alumina operating capacity is expected to see both increases and decreases, with no significant decline in total operating capacity anticipated. This week, the total national operating capacity of alumina stood at 88.26 million mt. The alumina market remains in a slight surplus, and spot alumina prices are likely to fluctuate downward in the short term.

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