The spot market was sluggish, and spot alumina prices may continue to decline in the short term [SMM Morning Comment].

SMM Alumina Morning Comment 3.26

Futures market: During the night session, the most-traded alumina 2505 contract opened at 3,063 yuan/mt, reached a high of 3,118 yuan/mt, a low of 3,063 yuan/mt, and closed at 3,098 yuan/mt, up 38 yuan/mt, a gain of 1.23%, with open interest at 204,000 lots.

Ore side: As of March 25, the SMM imported bauxite index stood at $93.16/mt, down $0.17/mt from the previous trading day, mainly due to a decline in caustic soda prices in Shandong. The SMM Guinea bauxite CIF average was $91/mt, unchanged from the previous day. The SMM Australia low-temperature bauxite CIF average was $87/mt, unchanged from the previous day. The SMM Australia high-temperature bauxite CIF average was $81/mt, unchanged from the previous day.

Industry news: Arrow Minerals disclosed 185 million mt of high-grade bauxite resources at its Niagara project in Guinea. On March 25, 2025, Arrow Minerals announced that the initial resource estimate for its Niagara bauxite project in Guinea reached 185 million mt, with an alumina grade of 42.3% and low silicon content, indicating high-quality development potential. The project is close to existing railway infrastructure, facilitating export transportation. Arrow is expected to commence development in 2025 and is currently advancing a preliminary scoping study for a low-capital startup plan. With sufficient funding and a management team experienced in global mining development, the company is transitioning from an exploration-focused to a development-focused entity, capitalizing on the high-price environment for bauxite in Guinea.

Spot-futures price spread report: According to SMM data, on March 25, the SMM alumina index was at a premium of 78 yuan/mt against the latest transaction price of the most-traded contract at 11:30 am.

Warrant report: On March 25, the total registered alumina warrants increased by 1,812 mt to 279,300 mt compared to the previous trading day. The total registered alumina warrants in Shandong remained unchanged at 4,513 mt. The total registered alumina warrants in Henan decreased by 600 mt to 26,700 mt. The total registered alumina warrants in Guangxi remained unchanged at 49,800 mt. The total registered alumina warrants in Gansu remained unchanged at 22,500 mt. The total registered alumina warrants in Xinjiang increased by 2,412 mt to 175,700 mt.

Overseas market: As of March 25, 2025, the FOB Western Australia alumina price was $400/mt, with an ocean freight rate of $21.20/mt. The USD/CNY exchange rate selling price was around 7.28, translating to a domestic mainstream port selling price of approximately 3,544 yuan/mt, which is 400 yuan/mt higher than the domestic alumina price, keeping the alumina import window closed. On the export side, based on the latest spot alumina transaction price in Shandong, the domestic alumina export cost is around $450/mt, lower than the overseas spot alumina price, keeping the export window closed.

Summary: The weekly operating rate of alumina has recently declined. As of last Thursday, according to SMM data, the national total operating capacity of metallurgical alumina decreased to 88.01 million mt/year, but the reduction was limited. According to SMM data, as of last Thursday, the domestic total operating capacity of aluminum was 43.84 million mt/year, translating to an alumina demand operating capacity of around 84.4 million mt/year. Even considering alumina net exports, the fundamentals still indicate a loose supply situation. In the short term, alumina prices are expected to remain under pressure. Subsequent attention should be paid to changes in alumina operating capacity.

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