Alumina's weekly operating capacity declined slightly MoM, while the absolute operating capacity remained high [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on July 4

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 3,019 yuan/mt, with a high of 3,058 yuan/mt, a low of 3,012 yuan/mt, and closed at 3,040 yuan/mt, up 8 yuan/mt or 0.25%, with an open interest of 282,000 lots.

Ore: As of July 3, the SMM imported bauxite index stood at $74.3/mt, down $0.01/mt from the previous trading day. 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. 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 an operating capacity of 88.63 million mt/year. The national alumina weekly operating rate fell by 0.31 percentage points WoW to 79.97%.
2. Alumina Port Inventory: According to SMM statistics on July 3, the domestic port alumina inventory totaled 43,000 mt, up 17,400 mt from the previous week.
3. Long-term Contract Purchase Price of Liquid Caustic Soda by Major Alumina Refineries in Shanxi: The purchase price of caustic soda by major alumina refineries in Shanxi Province in July fell by 130 yuan/mt compared to June. The delivery-to-factory prices for 50% ion-exchange membrane liquid caustic soda were approximately 2,790-2,890 yuan/mt (converted to 100% concentration), with slight price variations in some regions due to different transportation distances.
4. On July 3, Vedanta announced its key metal production for FY26Q1 (April-June 2025). Among them, Lanjigarh alumina production reached a record high of 587,000 mt, up 9% YoY and 36% MoM. The quarterly production of aluminum was 605,000 mt, up 1% YoY and unchanged MoM.

Spot-Futures Price Spread Daily Report: According to SMM data, on July 3, the SMM alumina index had a premium of 81.73 yuan/mt against the latest transaction price of the most-traded contract at 11:30 a.m.

Warrant Daily Report: On July 3, the total registered alumina warrant volume remained unchanged from the previous trading day at 21,300 mt. The total registered alumina warrant volume in Shandong remained unchanged at 0, in Henan remained unchanged at 0, in Guangxi remained unchanged at 3,902 mt, in Gansu remained unchanged at 0, and in Xinjiang remained unchanged at 17,400 mt.

Overseas Market: As of July 3, 2025, the FOB Western Australia alumina price was $361.6/mt, with an ocean freight rate of $21.80/mt. The USD/CNY selling rate was around 7.18. This price translates to approximately 3,112.73 yuan/mt for the external selling price at major domestic ports, which is 78.47 yuan/mt higher than the domestic alumina price. The alumina import window remains closed.

Summary: This week, alumina operating capacity decreased by 340,000 mt/a to 88.63 million mt/a. Alumina operating capacity is expected to remain high, with only a few manufacturers conducting routine maintenance. From the perspective of electrolytic aluminum production demand, alumina supply remains relatively loose, exerting downward pressure on alumina spot prices. However, the recent surge in alumina futures has brought the risk-free arbitrage window between futures and spot nearer to opening. Futures-to-spot traders are relatively active in their inquiries, and spot cargo availability has temporarily tightened, with suppliers raising their quotes. In the short term, alumina spot prices may see a slight rebound. Subsequent trends will still require monitoring of changes in supply and demand fundamentals, futures price movements, and transfer to delivery warehouse demands.

[Except for publicly available information, all other data are processed by SMM based on public information, market exchanges, and SMM's internal database models, for reference only, and do not constitute recommendations for decision-making.]