The alumina market maintains a surplus pattern, and spot prices continue their downward trend [SMM Alumina Morning Comment].

SMM Alumina Morning Comment Oct. 9
Futures:Before the holiday, the most-traded alumina 2601 contract opened at 2,897 yuan/mt, hit a high of 2,889 yuan/mt and a low of 2,863 yuan/mt, and finally closed at 2,868 yuan/mt, down 10 yuan/mt or 0.35%, with open interest at 285,000 lots.

Ore side:As of post-holiday, the SMM imported bauxite index was quoted at $74.84/mt, down $0.02/mt from the previous trading day; the SMM Guinea bauxite CIF average price was quoted at $73.5/mt, flat from the previous trading day; the SMM Australia low-temperature bauxite CIF average price was quoted at $70/mt, flat from the previous trading day; the SMM Australia high-temperature bauxite CIF average price was quoted at $61.5/mt, flat from the previous day/mt; the SMM Malaysia bauxite CIF average price was quoted at $50.5/mt, flat from the previous trading day; the SMM Malaysia bauxite CIF (washed) average price was quoted at $63/mt, flat from the previous trading day/mt. Overall, for domestic bauxite, spot alumina prices continued to decline, compressing alumina refinery profits in the region. Although supply pressure for northern bauxite has eased compared to earlier periods, supply in the region remains tight, and prices are expected to hold steady. For imported bauxite, with the pullback in Q4 long-term contract prices for large mining areas and high absolute inventory levels, bauxite prices are expected to remain in the doldrums in the short term.

Industry developments:
1) Morocco and China signed a $3 billion agreement to jointly build an integrated low-carbon aluminum industrial park. The project will include supporting renewable energy facilities such as solar and wind power, and adopt advanced electrolysis technology, aiming to achieve low-carbon production. The goal is to circumvent the EU's upcoming carbon tariff and help Morocco become a world-class low-carbon aluminum supplier, reshaping the market landscape.

Spot prices:As of post-holiday, the SMM alumina index was quoted at 2,975.13 yuan/mt, down 7.21 yuan/mt MoM; the SMM Shandong alumina index was quoted at 2,873 yuan/mt, down 11.04 yuan/mt MoM; the SMM Henan alumina index was quoted at 2,955.29 yuan/mt, down 10 yuan/mt MoM; the SMM Shanxi alumina index was quoted at 2,918.02 yuan/mt, down 5.74 yuan/mt MoM; the SMM Guizhou alumina index was quoted at 3,130.21 yuan/mt, down 6.75 yuan/mt MoM; the SMM Guangxi alumina index was quoted at 3,112.7 yuan/mt, down 5.48 yuan/mt MoM. A spot transaction of 2,000 mt of alumina was inquired yesterday in south-west China, with the mainstream winning bid delivery-to-factory price at 3,200 yuan/mt.

Spot-Futures Price Spread Daily Report: According to SMM data, after the holiday, the SMM alumina index showed a premium of 108.13 yuan/mt against the latest transaction price of the most-traded contract at 11:30.

Warrant Daily Report: After the holiday, the total registered volume of alumina warrants increased by 10,533 mt from the previous trading day to 170,300 mt. The total registered volume of alumina warrants in Shandong remained unchanged from the previous trading day at 0, in Henan at 0, in Guangxi at 0, in Gansu at 0, while in Xinjiang it increased by 10,533 mt from the previous trading day to 170,300 mt.

Overseas Market: As of after the holiday, the FOB Western Australia alumina price was $325/mt, the ocean freight rate was $23.9/mt, and the USD/CNY selling rate was around 7.15. This price translates to a selling price of approximately 2,880.82 yuan/mt at mainstream domestic ports, which is 94.31 yuan/mt lower than the SMM alumina index price, keeping the import window open.

Summary: Overall, the alumina market remained in a surplus pattern during the cycle. Supply side, domestic operating capacity for alumina stayed high recently, with weekly production flat compared to the previous week, coupled with the continuous opening of the import window; although alumina profit margins have been compressed, no production cuts by alumina refineries have been reported so far. Demand side, raw material inventories at aluminum smelters remain high, and spot procurement enthusiasm from alumina refineries is currently insufficient. In general, spot alumina prices continued their downward trend in the short term.

[Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.]