Alumina supply continues to rebound, with a slight inventory buildup of alumina at aluminum smelters [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on June 6

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 2,945 yuan/mt, with a high of 2,970 yuan/mt, a low of 2,928 yuan/mt, and closed at 2,953 yuan/mt, down 17 yuan/mt or 0.56% from the previous settlement. The open interest stood at 309,000 lots.

Ore Market: As of June 5, the SMM Import Bauxite Index was reported at $74.94/mt, up $0.23/mt from the previous trading day. The SMM Guinea Bauxite CIF average price was reported at $75/mt, up $1/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 Updates:

1. Alumina Weekly Production Update: 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 87.27 million mt/year. The national alumina weekly operating rate rebounded by 0.54 percentage points WoW to 78.75%, mainly due to the resumption of production at some alumina facilities that had undergone maintenance or production cuts earlier.
2. Alumina Port Inventories: According to SMM statistics on June 5, the total alumina inventories at domestic ports were 57,000 mt, up 32,000 mt from the previous week.
3. According to foreign media reports, the premium paid by US consumers for aluminum purchases in the spot market hit a record high of 60¢ per pound or $1,323 per tonne on Thursday, following the US's imposition of higher tariffs on imported aluminum. Since November last year, the Midwest aluminum premium in the US has surged nearly 190%. When US consumers purchase aluminum in the spot market, they typically pay the London Metal Exchange (LME) benchmark price plus a premium to cover costs including freight and taxes. The US is highly dependent on aluminum imports, with the vast majority coming from Canada. The US aluminum market has reached a record high.

Spot-Futures Price Spread Report: According to SMM data, on June 5, the SMM Alumina Index premium against the latest transaction price of the most-traded contract at 11:30 was 332.73 yuan/mt.

Warrant Report: On June 5, the total registered alumina warrants decreased by 6,016 mt from the previous trading day to 96,400 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 300 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 0 mt. The total registered alumina warrants in the Xinjiang region decreased by 6,016 mt from the previous trading day to 92,500 mt.

Overseas Market: As of June 5, 2025, the FOB Western Australia alumina price was $370/mt, with an ocean freight rate of $21.85/mt. The USD/CNY selling rate hovered around 7.20. This price translates to approximately 3,268 yuan/mt in terms of the external selling price at major domestic ports, which is 5 yuan/mt lower than the domestic alumina price. The alumina import window remained open.

Summary: This week, the operating capacity of alumina rebounded by 600,000 mt/year to 87.27 million mt/year. It is understood that some imported alumina has arrived at Chinese ports. With supply recovering and no significant changes in demand, the total alumina inventory at aluminum smelters increased by 19,000 mt to 2.63 million mt this week. Recently, spot alumina transactions have turned sluggish, with a strong wait-and-see sentiment in the market, and spot prices have stopped rising. On Thursday, news emerged of low-price alumina tenders and purchases by aluminum smelters, driving the futures market to pull back. In the short term, the alumina fundamentals may shift towards a relatively loose pattern, with alumina prices expected to be in the doldrums. Subsequent attention should be paid to changes in the capacity of domestic alumina enterprises and the supply of imported alumina.

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