Cost Support Weakened, Prices Under Pressure [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 10.1

Futures:Before the holiday, the most-traded alumina 2601 contract opened at 2,883 yuan/mt, reached a high of 2,913 yuan/mt, a low of 2,874 yuan/mt, and finally closed at 2,880 yuan/mt, up 5 yuan/mt, an increase of 0.17%, with open interest at 318,000 lots.

Ore:As of October 9, the SMM imported bauxite index was reported at $74.84/mt, flat from the previous trading day; the SMM Guinea bauxite CIF average price was reported at $73.5/mt, flat from the previous trading day; the SMM Australia low-temperature bauxite CIF average price was reported at $70/mt, flat from the previous trading day; the SMM Australia high-temperature bauxite CIF average price was reported at $61.5/mt, flat from the previous trading day; the Malaysia bauxite CIF average price was reported at $50.5/mt, flat from the previous trading day; the Malaysia bauxite CIF (washed) average price was reported at $63/mt, flat from the previous trading day. Overall, the domestic bauxite market remained calm this week, with bauxite production unaffected by the National Day holiday. Although domestic ore inventory continued to pull back, limited room for alumina refineries to concede profits on bauxite, amid compressed alumina margins and ample overseas supply, kept top-side pressure on bauxite prices, and domestic bauxite prices are expected to hold steady in the near term.

Industry News:

1) Pakistan's Hubco Power Company recently announced a diversification plan, with core initiatives including leveraging its coastal power plant location and local bauxite resources to build an aluminum smelter to integrate the industry chain. Meanwhile, cooperation with China's BYD progressed, with local assembly of the popular car model Atto 3 scheduled to start in H2 2026, and subsequent investments will be implemented gradually with the opening of EPC letters of credit.

2) On October 7, 2025, a senior Russian delegation met with the Governor of Central Kalimantan Province in Palangkaraya. During the constructive meeting, discussions focused on two ambitious proposals: building a nuclear power plant and developing a bauxite processing and smelting facility. This cooperation holds potential turning-point significance for enhancing the province's industrial level and Indonesia's overall energy security and deep-processing capacity for resources.

3) Jiaozuo Wanfang's acquisition of Sanmenxia Aluminum Industry for approximately 31.9 billion yuan passed the restructuring proposal with high votes. This merger will integrate the "alumina-aluminum" industry chain, is expected to save annual procurement costs by over 1.5 billion yuan, significantly enhance the company's competitiveness, and potentially alter the domestic aluminum industry landscape.

Spot Price:As of October 9, 2025, the SMM alumina index was reported at 2,967.87 yuan/mt, down 7.26 yuan/mt MoM; the SMM Shandong alumina index was reported at 2,868.56 yuan/mt, down 5.40 yuan/mt MoM; the SMM Henan alumina index was reported at 2,946.62 yuan/mt, down 8.67 yuan/mt MoM; the SMM Shanxi alumina index was reported at 2,912.41 yuan/mt, down 5.61 yuan/mt MoM; the SMM Guizhou alumina index was reported at 3,116.27 yuan/mt, down 13.94 yuan/mt MoM; the SMM Guangxi alumina index was reported at 3,097.11 yuan/mt, down 15.59 yuan/mt MoM. A spot transaction of 10,000 mt of alumina was concluded in north China yesterday, with the mainstream winning bid for delivery-to-factory prices at 3,180 yuan/mt.

Spot-Futures Price Spread Daily Report:According to SMM data, the SMM alumina index on October 9 showed a premium of 114.87 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warrant Daily Report:On October 9, the total registered volume of alumina warrants increased by 2,718 mt WoW to 173,000 mt. The total registered volume of alumina warrants in Shandong remained unchanged WoW at 0, in Henan remained unchanged WoW at 0, in Guangxi remained unchanged WoW at 0, in Gansu remained unchanged WoW at 0, and in Xinjiang increased by 2,718 mt WoW to 173,000 mt.

Overseas Market:As of October 9, 2025, the FOB Western Australia alumina price was $325/mt, the ocean freight rate was $23.85/mt, and the USD/CNY selling rate was around 7.15. This price translates to a selling price of approximately 2,896.80 yuan/mt at major domestic ports, which is 71.07 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 period. Supply side, domestic operating capacity for alumina remained high recently, but the national weekly operating rate for alumina saw a slight decline; weekly production decreased by 3,000 mt WoW; alumina profit margins were compressed, and the industry's overall average cost still allowed for profits compared to the average online price, though some high-cost enterprises have entered a loss state, with only individual companies reportedly considering production cuts. Demand side, the latest inventory showed that aluminum smelters' raw material alumina inventory stood at 3.094 million mt, accumulating 129,000 mt WoW. As winter stockpiling approaches, some aluminum smelters have shown increased enthusiasm for spot purchases, but the overall spot market remains in a state of loose supply. Spot alumina prices are expected to continue their downward trend in the short term.

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