Alumina prices continue to rise, while SHFE aluminum operates steadily today [SMM Aluminum Futures Brief Comment]

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SMM, May 20:

Today, the most-traded SHFE aluminum 2507 contract opened at 20,050 yuan/mt, with a high of 20,110 yuan/mt, a low of 20,005 yuan/mt, and closed at 20,075 yuan/mt, down 0.45%. Trading volume was 106,000 lots, and open interest was 199,800 lots.

SMM Commentary: On the supply side, domestic aluminum capacity is approaching its ceiling, and the insufficient recovery of hydropower in Yunnan has exacerbated regional supply tightness, limiting the increase in aluminum ingot output. On the cost side, the sudden revocation of mining licenses in Guinea last Friday night led to production halt notices being issued for the affected mines, sparking market concerns about the supply of bauxite raw materials, which may push up alumina costs. However, the specific impact remains to be assessed. On the demand side, it faces dual pressures from domestic seasonal weakness and trade uncertainties, making significant growth unlikely in the short term. On Monday, SMM recorded domestic aluminum ingot inventory at 585,000 mt, a slight increase of 4,000 mt from last Thursday. Arrivals increased significantly over the weekend, but whether this will lead to inventory buildup depends on whether downstream restocking demand for export orders can match the increase in arrivals. Overall, macro-level positives and low inventory provide support for aluminum prices, but the off-season pressure on the demand side limits upside room. In the short term, attention should be paid to domestic and overseas demand performance as well as the supply situation of bauxite.

Today, the most-traded alumina 2509 contract opened at 3,149 yuan/mt, with a high of 3,206 yuan/mt, a low of 3,110 yuan/mt, and closed at 3,134 yuan/mt, up 1.42%. Trading volume was 1.945 million lots, and open interest was 342,000 lots.

SMM Commentary: Last week, maintenance and production cuts were concentrated among alumina refineries in south China, with operating capacity decreasing by 2.9 million mt/year MoM, further tightening spot supply. Additionally, alumina refineries have been facing losses in recent months, leading to strong intentions to refuse to budge on prices. Coupled with maintenance and production cuts, spot supply tightened, and spot prices rebounded significantly. Last Friday, due to the revocation of mining rights for some companies in Guinea, some currently operating companies received production halt notices, and some miners declared force majeure to shipping companies this week. The specific impact of this incident on Guinea's bauxite supply remains to be assessed. In the short term, it may provide sentiment-based support for bauxite prices, thereby supporting alumina costs. Subsequent attention should be paid to changes in the operating capacity of alumina refineries, as well as the shipment volume of Guinea's bauxite from the raw material side and the dynamics of related companies.

[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 rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]