The news boosted alumina futures to rise, with attention to be paid to the subsequent demand for alumina transfer to delivery warehouse [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 7.3

Futures Market: Overnight, the most-traded alumina ag2509 futures contract opened at 3,075 yuan/mt, with a high of 3,083 yuan/mt, a low of 3,040 yuan/mt, and closed at 3,058 yuan/mt, up 45 yuan/mt or 1.49%, with an open interest of 279,000 lots.

Ore: As of July 2, the SMM imported bauxite index stood at $74.31/mt, up $0.1/mt from the previous trading day, mainly due to news of mining-related measures in Guinea and a decline in Guinea's bauxite port departures, leading some suppliers to be bullish on bauxite prices. The SMM Guinea bauxite CIF average price was $74/mt, unchanged from the previous trading day. The SMM Australia low-temperature bauxite CIF average price was $70/mt, unchanged from the previous trading day. The SMM Australia high-temperature bauxite CIF average price was $61/mt, unchanged from the previous trading day.

Industry News:

1. Overseas Alumina Transactions: On July 2, 30,000 mt of alumina was traded overseas at a transaction price of $361.6/mt FOB Western Australia, with an August shipment date.
2. According to media reports, Bouna Sylla, Guinea's Minister of Mines and Geology, announced a series of "bold" reform measures for the country's mining industry. One of the core measures is the creation of the Guinea Bauxite Index (GBX). Additionally, the Guinea government plans to fully exercise its sales and transportation rights in accordance with the mining law and existing agreements.
3. Caustic Soda Procurement Prices of Mainstream Alumina Refineries in Henan Province in July: SMM learned that the procurement price of 32% ionic membrane liquid caustic soda under long-term contracts for mainstream alumina refineries in Henan Province in July fell by 140 yuan/mt compared to June, with a delivery-to-factory price range of 2,800-2,950 yuan/mt (converted to 100% concentration).
4. Central Financial and Economic Affairs Commission: Regulate enterprises' low-price and disorderly competition in accordance with laws and regulations, and promote the orderly exit of backward production capacity. Xi Jinping, General Secretary of the Communist Party of China Central Committee, President of the People's Republic of China, Chairman of the Central Military Commission, and Director of the Central Financial and Economic Affairs Commission, chaired the sixth meeting of the Central Financial and Economic Affairs Commission on the morning of July 1. The meeting emphasized that to advance the construction of a unified national market, it is necessary to focus on key and difficult issues, regulate enterprises' low-price and disorderly competition in accordance with laws and regulations, guide enterprises to improve product quality, and promote the orderly exit of backward production capacity. It is also necessary to standardize government procurement and tendering, strengthen the fairness review of winning bid results, standardize local investment promotion, strengthen the disclosure of investment promotion information, focus on promoting the integrated development of domestic and foreign trade, smooth the path for export-to-domestic sales transitions, and cultivate a batch of high-quality domestic and foreign trade enterprises. Additionally, it is necessary to continue carrying out special actions to standardize law enforcement involving enterprises, improve the fiscal and taxation system, statistical accounting system, and credit system that are conducive to market unification.

Basis Daily Report: According to SMM data, the SMM Alumina Index stood at a premium of 111.78 yuan/mt against the latest transaction price of the most-traded contract at 11:30 on July 2.

Warrant Daily Report: On July 2, total registered alumina warrants decreased by 601 mt from the previous trading day to 21,300 mt. Shandong region's total registered alumina warrants remained unchanged at 0, Henan region's remained unchanged at 0, Guangxi region's remained unchanged at 3,902 mt, Gansu region's remained unchanged at 0, and Xinjiang region's decreased by 601 mt from the previous day to 17,400 mt.

Overseas Market: As of July 2, 2025, FOB Western Australia alumina price stood at $370/mt, ocean freight rate at $21.9/mt, and USD/CNY selling rate around 7.19. This price equates to approximately 3,262 yuan/mt at domestic main ports, which is 151 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: In the futures market, recent volatile news including Guinea's government announcement to establish a bauxite national index, news about new alumina capacity additions, and the Central Finance and Economics Commission's emphasis on regulating low-price disorderly competition and promoting orderly exit of outdated capacity have boosted alumina futures. In the short term, risk-free arbitrage profit between futures and spot has turned positive again, with expected increases in warehouse transfer demand potentially driving a slight rebound in spot prices. However, from a production-demand perspective, the alumina market maintains an overall surplus situation. Cost-wise, Q3 bauxite long-term contract prices are expected to remain stable or decline, with alumina production costs projected to stabilize or slightly decrease.

[Data other than public information are processed by SMM based on public information, market exchanges, and SMM's internal database models, for reference only and do not constitute investment advice.]