Alumina enterprises have a strong intention to stand firm on quotes, coupled with maintenance and production cuts leading to tighter supply, alumina prices hold up well [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on May 16

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 2,980 yuan/mt, with a high of 3,008 yuan/mt, a low of 2,967 yuan/mt, and closed at 2,995 yuan/mt, up 7 yuan/mt or 0.23%, with an open interest of 338,000 lots.

Ore Market: As of May 15, the SMM Import Bauxite Index was reported at $70.41/mt, down $0.05/mt from the previous trading day. The SMM Guinea Bauxite CIF average price was reported at $70/mt, unchanged from the previous trading day. The SMM Australia Low-Temperature Bauxite CIF average price was reported at $70/mt, unchanged from the previous trading day. The SMM Australia High-Temperature Bauxite CIF average price was reported at $65/mt, unchanged from the previous trading day.

Industry News:

(1) A large alumina refinery in Shandong raises liquid caustic soda purchase price: According to SMM, starting from May 16, a large alumina refinery in Shandong adjusted the purchase price of 32% ionic membrane liquid caustic soda, increasing it by 15 yuan/mt from the base price of 745 yuan/mt. The ex-factory price under the two-invoice system will be 760 yuan/mt (approximately 2,375 yuan/mt converted to 100% concentration).

(2) A large alumina refinery in Shandong raises liquid caustic soda purchase price: According to SMM, starting from May 16, a large alumina refinery in Shandong adjusted the purchase price of 32% ionic membrane liquid caustic soda, increasing it by 15 yuan/mt from the base price of 745 yuan/mt. The ex-factory price under the two-invoice system will be 760 yuan/mt (approximately 2,375 yuan/mt converted to 100% concentration).

(3) Alumina Port Inventory: According to SMM statistics on May 15, the total alumina inventory at domestic ports was 38,000 mt, an increase of 1,000 mt from the previous week.

Spot-Futures Price Spread Daily Report: According to SMM data, on May 15, the SMM Alumina Index was at a discount of 72 yuan/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant Daily Report: On May 15, the total registered alumina warrants decreased by 1.05 mt from the previous trading day to 199,300 mt. The total registered alumina warrants in the Shandong region remained unchanged from the previous trading day at 601 mt. The total registered alumina warrants in the Henan region remained unchanged from the previous trading day at 3,001 mt. The total registered alumina warrants in the Guangxi region decreased by 2,401 mt from the previous trading day to 13,200 mt. The total registered alumina warrants in the Gansu region remained unchanged from the previous trading day at 6,306 mt. The total registered alumina warrants in the Xinjiang region decreased by 8,099 mt from the previous trading day to 176,200 mt.

Overseas Market: As of May 15, 2025, the FOB Western Australia alumina price was $370/mt, with an ocean freight rate of $21.50/mt. The USD/CNY exchange rate selling price was around 7.23. This price translates to approximately 3,278 yuan/mt for the external selling price at major domestic ports, which is 342.09 yuan/mt higher than the domestic alumina price. The alumina import window remained closed.

Summary:

This week, maintenance and production cuts were concentrated among alumina enterprises in south China, with operating capacity decreasing by 2.9 million mt/year on a QoQ basis, leading to a further tightening of spot cargo availability. Additionally, alumina enterprises have been facing continuous losses in recent months, with a strong intention to stand firm on quotes. Coupled with maintenance and production cuts, the tightening of spot cargo availability has led to a significant rebound in spot prices. In the futures market, alumina futures have rebounded strongly, driven by a shift in the alumina fundamentals towards a deficit, as well as news on production dynamics of domestic alumina enterprises, the revocation of mining rights of several miners in Guinea, and favourable macro front news. In the short term, due to the concentrated maintenance and production cuts, the availability of spot alumina is expected to remain tight, with prices expected to hold up well. However, as maintenance at alumina enterprises concludes and new capacity is released, operating capacity is expected to rebound. It is necessary to continuously monitor the maintenance, production cuts, and production resumptions of alumina enterprises.

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