Under the influence of supply-side disruption news for bauxite, the cost-supporting effect of alumina is expected to strengthen [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on May 26

Futures Market: On Friday, the most-traded alumina 2509 futures contract opened at RMB 3,150/mt during the night session, with a high of RMB 3,170/mt, a low of RMB 3,103/mt, and closed at RMB 3,103/mt, down RMB 66/mt or 2.08%. The open interest was 390,000 lots.

Ore: As of May 23, the SMM Import Bauxite Index was reported at $72.86/mt, up $0.72/mt from the previous trading day. The SMM Guinea Bauxite CIF average price was reported at $74/mt, up $2/mt 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. On May 15, Indonesia's Bintan Alumina Company achieved a significant milestone as the ore feeding to the raw material mill and the hot commissioning with water and steam injection for the digestion unit of the Phase III alumina project were initiated simultaneously. This marked the official entry of the project into the trial production stage, injecting new momentum into the company's development. As the initial core link in the alumina production process, the raw material mill undertakes the crucial task of finely grinding raw materials such as bauxite. Its successful ore feeding indicates that the project's raw material supply system is now unobstructed, laying a solid foundation for subsequent production. Meanwhile, the hot commissioning with water and steam injection for the digestion unit is also progressing in an orderly manner. As steam is gradually injected and the equipment warms up, the unit's efficient and stable production capacity gradually becomes apparent, providing a solid guarantee for subsequent production processes.
2. Bauxite Port Inventory: According to SMM statistics on May 23, the total bauxite inventory at nine domestic ports was 20.98 million mt, an increase of 1.73 million mt from the previous week.

Spot-Futures Price Spread Daily Report: According to SMM data, on May 23, the SMM Alumina Index had a premium of RMB 17.96/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant Daily Report: On May 23, the total registered alumina warrant volume decreased by 6,601 mt from the previous trading day to 157,000 mt. The total registered alumina warrant volume in the Shandong region remained unchanged from the previous trading day at 601 mt. The total registered alumina warrant volume in the Henan region remained unchanged from the previous trading day at 3,001 mt. The total registered alumina warrant volume in the Guangxi region decreased by 901 mt from the previous trading day to 7,204 mt. The total registered alumina warrant volume in the Gansu region remained unchanged from the previous trading day at 6,306 mt. The total registered alumina warrant volume in the Xinjiang region decreased by 5,700 mt from the previous trading day to 139,900 mt.

Overseas Market: As of May 23, 2025, the FOB Western Australia alumina price was $370/mt, with an ocean freight rate of $21.40/mt. The USD/CNY selling rate was around 7.21. This price translates to an external selling price of approximately RMB 3,270/mt at major domestic ports, which is RMB 82.04/mt higher than the domestic alumina price. The alumina import window remained closed.

Summary: Last week, some enterprises in north China underwent maintenance, while some alumina refineries in south China completed their maintenance, leading to a rebound in operating capacity. Overall, the national alumina operating capacity increased by 1.09 million mt WoW last week. In the near future, some new alumina enterprises are expected to undergo maintenance, while some enterprises are anticipated to complete their maintenance and resume operations, resulting in a continued slight rebound in overall operating capacity. 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 towards a surplus, 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.]