Operating capacity of alumina rebounds slightly, bauxite prices rise, pushing alumina cost curve upwards [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on May 23

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 3,191 yuan/mt, with a high of 3,228 yuan/mt, a low of 3,153 yuan/mt, and closed at 3,199 yuan/mt, down 30 yuan/mt or 0.94%, with open interest at 393,000 lots.

Spot Alumina: On Thursday, inquiries revealed that 3,000 mt of alumina were traded in Guizhou at a transaction price of 3,230 yuan/mt.

Ore: As of May 22, the SMM imported bauxite index was reported at $72.14/mt, up $0.94/mt from the previous trading day, mainly due to some Guinea bauxite transactions with prices rising to $74/mt. The SMM Guinea bauxite CIF average price was reported at $72/mt, up $2/mt from the previous trading day. The SMM Australian low-temperature bauxite CIF average price was reported at $70/mt, unchanged from the previous trading day. The SMM Australian high-temperature bauxite CIF average price was reported at $65/mt, unchanged from the previous trading day.

Industry News:

1. Weekly Alumina Production Dynamics: According to SMM data, as of Thursday this week, the total installed capacity of metallurgical-grade alumina in China was 109.22 million mt/year, with a total operating capacity of 85.21 million mt/year. The national weekly alumina operating rate rebounded by 0.99 percentage points WoW to 78.01%, mainly due to the end of maintenance and production cuts at some enterprises, leading to a rebound in operating capacity.
2. Alumina Port Inventory: According to SMM statistics on May 22, the total alumina inventory at domestic ports was 30,000 mt, down 8,000 mt from the previous week.

Basis Report: According to SMM data, on May 22, the SMM alumina index was at a discount of 102.43 yuan/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant Report: On May 22, the total registered alumina warrants decreased by 9,895 mt from the previous trading day to 163,600 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 1,201 mt from the previous trading day to 81.05 million mt (Note: There seems to be a unit error here; it should likely be 8,105 mt instead of 81.05 million mt, but the original text is translated as is). 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 8,694 mt from the previous trading day to 145,600 mt.

Overseas Market: As of May 22, 2025, the FOB Western Australia alumina price was $370/mt, with an ocean freight rate of $21.40/mt. The USD/CNY exchange rate selling price was around 7.22. This price translates to an external selling price of approximately 3,274 yuan/mt at major domestic ports, which is 146 yuan/mt higher than the domestic alumina price. The alumina import window remained closed.

Summary: This week, some enterprises in north China underwent maintenance, while some alumina refineries in south China completed maintenance, leading to a rebound in operating capacity. Overall, the national alumina operating capacity increased by 1.09 million mt WoW this week. In the near future, some new alumina enterprises are expected to undergo maintenance, while some enterprises are anticipated to complete maintenance and resume operating capacity. On the whole, the operating capacity is expected to continue to rebound slightly. Affected by the supply-side disruptions in the bauxite market, bauxite ore prices have risen, and the cost support for alumina is expected to strengthen. Coupled with the fact that the short-term fundamentals have not shifted to a surplus situation, there is still upward momentum in prices. However, with the repair of supply, the alumina price increase may encounter resistance, and in the short term, the alumina price is expected to hold up well.

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