The market has strong expectations for alumina production resumptions, and the first pullback in alumina futures prices may drive spot cargo prices weaker [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 5.30

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 2,952 yuan/mt, with a high of 2,986 yuan/mt, a low of 2,941 yuan/mt, and closed at 2,954 yuan/mt, down 10 yuan/mt or 0.34%, with an open interest of 353,000 lots.

Ore: As of May 29, the SMM Import Bauxite Index was reported at $74.11/mt, up $0.23/mt from the previous trading day. The SMM Guinea Bauxite CIF average price was reported at $74/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. According to SMM, starting from May 30, a large alumina refinery in Shandong adjusted the purchase price of 32% ionic membrane liquid caustic soda, raising it by 20 yuan/mt from the base price of 820 yuan/mt. The ex-factory price under the two-invoice system was set at 840 yuan/mt (approximately 2,625 yuan/mt converted to 100% concentration).
2. Alumina Port Inventory: According to SMM statistics on May 29, the total alumina inventory at domestic ports was 25,000 mt, a decrease of 5,000 mt from the previous week.
3. According to SMM data, as of Thursday this week, the total installed capacity of metallurgical-grade alumina in China was 110.82 million mt/year, with a total operating capacity of 86.67 million mt/year. The national alumina weekly operating rate rebounded by 0.19 percentage points WoW to 78.21%, mainly due to the completion of maintenance at some enterprises and the rebound in operating capacity.
4. The impact of the Guinea bauxite mining rights incident on market sentiment gradually eased this week, and transaction prices did not rise further. As of Thursday this week, the Guinea bauxite CIF price was reported at $74/mt, up $2/mt from last Thursday. Affected by the concentration of Guinea bauxite transaction prices around $73-75/mt, the SMM Import Bauxite Index rose. As of Thursday this week, the SMM Import Bauxite Index was reported at $74.11/mt, up $1.97/mt from last Thursday. There has been no progress in the Guinea bauxite mining rights incident, and bauxite suppliers are not strongly inclined to sell at low prices. However, the operating capacity of alumina has not yet rebounded significantly. In the short term, the bauxite market fundamentals are expected to remain in a surplus pattern, with general intentions to purchase bauxite at high prices. In the short term, the price of imported bauxite is expected to enter a phase of volatile adjustment.

Spot-Futures Price Spread Daily Report: According to SMM data, on May 29, the SMM Alumina Index had a premium of 331.51 yuan/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant Daily Report: On May 28, the total registered alumina warrants decreased by 2,093 mt from the previous trading day to 138,100 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 decreased by 299 mt from the previous trading day to 1,500 mt. The total registered alumina warrants in the Guangxi region remained unchanged from the previous trading day at 3,001 mt. The total registered alumina warrants in the Gansu region remained unchanged from the previous trading day at 5,105 mt. The total registered alumina warrants in the Xinjiang region decreased by 1,794 mt from the previous trading day to 127,900 mt.

Overseas Market: As of May 28, 2025, the FOB Western Australia alumina price was $370/mt, with an ocean freight rate of $21.95/mt. The USD/CNY selling rate hovered around 7.21. This price translates to approximately 3,272 yuan/mt in terms of the external selling price at major domestic ports, which is 2.28 yuan/mt lower than the domestic alumina price. The alumina import window is gradually opening.

Summary:

This week, the weekly operating capacity of alumina continued to rebound, increasing by 1.46 million mt/year WoW to 86.67 million mt/year. The pressure on spot supply has further eased, and the upward momentum of spot prices has slowed down. Recent overseas alumina transactions have been relatively sluggish, with relatively small price fluctuations. As domestic prices continue to rise, alumina imports have shifted from losses to profits, and the domestic alumina import window is gradually opening. In the short term, with the gradual resumption of production of some alumina facilities that were previously shut down for maintenance and production cuts, the supply pressure on alumina is expected to gradually ease. The average profit margin of the alumina industry has entered a profitable state, and the market has strong expectations for alumina production resumptions. Alumina futures prices have taken the lead in pulling back, which may drive spot prices weaker. Going forward, it is necessary to continuously monitor changes in the capacity of domestic alumina enterprises, as well as the supply of imported alumina.

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