Futures prices fall back from highs, narrowing the profit margin for arbitrage between futures and spot [SMM Alumina Morning Comment]

SMM Alumina Morning Comment on July 17

Futures Market: Overnight, the most-traded alumina 2509 futures contract opened at 3,100 yuan/mt, with a high of 3,122 yuan/mt, a low of 3,068 yuan/mt, and closed at 3,086 yuan/mt, down 37 yuan/mt or 1.20% from the previous close, with an open interest of 243,000 lots.

Ore: As of July 16, the SMM imported bauxite index stood at $73.37/mt, down $0.23/mt from the previous trading day; the SMM Guinea bauxite CIF average price was $73/mt, down $0.5/mt from the previous trading day; the SMM Australia low-temperature bauxite CIF average price was $70/mt, unchanged from the previous trading day; and the SMM Australia high-temperature bauxite CIF average price was $61/mt, unchanged from the previous trading day.

Industry News:

1. On July 16, bauxite developer Canyon Resources announced with pleasure that the construction of an inland railway facility at Makor, Cameroon, had commenced. This inland railway facility is a key piece of infrastructure supporting the export of its flagship Minim Martap bauxite project. Construction of the inland railway facility began just a few months after the company received approval from the Cameroonian government for the site selection, demonstrating the company's commitment to rapidly advancing the project. In addition, the company has also begun upgrading the ore transportation corridor connecting the Minim Martap project and the inland railway facility. Mr. Mark Hohnen, Executive Chairman of Canyon, said, "The commencement of construction of the inland railway facility and the upgrading of the ore transportation corridor are two major milestones for the company's development. The company is accelerating the progress of the Minim Martap project and expects to achieve its first production in early 2026 and deliver its first batch of bauxite in the first half of 2026." Canyon has secured railway access from Makor to the Douala port, as well as 65,000 m² of land for the storage and loading of bauxite at the port. This will enable the company to efficiently store and transport up to 6 million mt of bauxite per year, with plans to eventually expand this capacity to 10 million mt per year to align with the production growth of the Minim Martap mine.


2. On July 14, a dedicated container train loaded with 2,688 mt of alumina departed from Baise East Station in Guangxi and headed for Xinjiang. This was the first dedicated alumina train directly departing from Guangxi to Xinjiang, carrying 84 containers and 2,688 mt of alumina, and is expected to arrive at Sanping Station in Xinjiang within 10 days. This marks the official opening of a new efficient and low-carbon railway logistics corridor between the two regions, injecting new momentum into deepening east-west cooperation, serving the national "Belt and Road" initiative and the construction of the New Western Land-Sea Corridor, and strongly supporting the industrial layout of "aluminum westward migration."

Spot-Futures Price Spread Report: According to SMM data, the SMM alumina index showed a premium of 48.75 yuan/mt against the most-traded contract's latest transaction price at 11:30 on July 16.

Warrant Report: On July 16, the total registered alumina warrant volume remained flat from the previous trading day at 25,500 mt. Regional breakdown: Shandong (0 mt, flat), Henan (0 mt, flat), Guangxi (1,200 mt, flat), Gansu (0 mt, flat), and Xinjiang (24,300 mt, flat).

Overseas Market: As of July 16, 2025, FOB Western Australia alumina price stood at $366/mt with ocean freight rate at $22.15/mt. With the USD/CNY selling rate around 7.2, this translated to approximately 3,236 yuan/mt at domestic mainstream ports, 61 yuan/mt higher than domestic alumina prices, keeping the import arbitrage window closed.

Summary: From aluminum smelters' raw material demand perspective, alumina supply remains relatively ample with operating capacity near 88.5 million mt/year, while combined aluminum production and net export demand annualized at around 86 million mt. SMM data showed a 22,000 mt WoW inventory buildup at smelters last week. The most-traded alumina contract pulled back below 3,100 yuan/mt, narrowing spot-futures arbitrage margins, which may weaken future transfer-to-warehouse demand and signal potential spot price peaking.

[Other non-public data are derived from public information, market exchanges, and SMM's proprietary database models for reference only, not constituting decision-making advice.]