Futures and Spot Prices Fell in Tandem, Oversupply Persists Amid High Inventory [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 10.16

Futures:The most-traded alumina futures contract a2601 opened at 2,799 yuan/mt overnight, hit a high of 2,799 yuan/mt, touched a low of 2,773 yuan/mt, and finally closed at 2,780 yuan/mt, down 17 yuan/mt or 0.61% from the previous day. Open interest stood at 378,000 lots. Technically, the daily candlestick closed in negative territory, extending the recent downtrend. Looking at the moving averages, the MA5 (2,783.40), MA10 (2,790.70), and MA30 (2,802.97) all remained above the closing price, maintaining a suppressive posture. Meanwhile, the MACD indicator continued to operate below the zero axis, reflecting persistent bearish sentiment that still dominates the market.

Industry Developments:
1) Recently, an indefinite strike broke out at Guinea's CBK company due to the management's refusal to implement labor laws, violation of collective agreements, and significant wage disparities, leading to a complete halt in production and transportation. Workers are demanding a monthly salary increase to 8.5 million Guinean francs and the replacement of the general manager and mining head, who are accused of ignoring workers' rights. The union stated that work will not resume until the general manager steps down but is willing to resolve the dispute through dialogue mediated by the labor inspection department.

Ore Side:As of October 15, the SMM imported bauxite index was reported at $74.45/mt, down $0.26/mt from the previous trading day. The SMM Guinea bauxite CIF average price was $73/mt, down $0.5/mt. The SMM Australia low-temperature bauxite CIF average price was $70/mt, flat from the previous day. The SMM Australia high-temperature bauxite CIF average price was $61.5/mt, flat from the previous day. The SMM Malaysia bauxite CIF average price was $50.5/mt, flat from the previous day, while the SMM Malaysia bauxite CIF (washed) average price was $63/mt, unchanged. Overall, against the backdrop of high bauxite inventory, market feedback indicates a continued downward trend in spot market transaction prices for bauxite. In the short term, imported bauxite prices are expected to hold up well. Recently, many parts of China have experienced heavy rainfall, which has affected bauxite mining in Henan to some extent. Some mining areas in Guangxi reported that bauxite mining has not been affected so far, with only mine transport roads experiencing water accumulation. Transport is expected to gradually resume once the weather improves.

Spot Prices:As of October 15, 2025, the SMM alumina index was reported at 2,942.48 yuan/mt, down 10.07 yuan/mt MoM. The SMM Shandong alumina index was 2,841.68 yuan/mt, down 9.38 yuan/mt MoM. The SMM Henan alumina index was 2,909.46 yuan/mt, down 7.96 yuan/mt MoM. The SMM Shanxi alumina index was 2,887.52 yuan/mt, down 7.67 yuan/mt MoM. The SMM Guizhou alumina index was 3,091.76 yuan/mt, down 7.82 yuan/mt MoM. The SMM Guangxi alumina index was 3,064.05 yuan/mt, down 22.80 yuan/mt MoM. Two transactions were inquired yesterday, with two aluminum smelters in the northwest region launching tenders. A tender for 10,000 mt of alumina in Xinjiang resulted in a delivery-to-factory price of 3,130 yuan/mt; another tender for 10,000 mt of alumina in Gansu was concluded at a delivery-to-factory transaction price of 3,025 yuan/mt.

Spot-Futures Price Spread Daily Report:According to SMM data, as of 11:30 on October 15, the SMM alumina index showed a premium of 159.48 yuan/mt against the latest transaction price of the most-traded contract.

Warrant Daily Report:On October 15, the total registered volume of alumina warrants increased by 6,038 mt from the previous trading day to 217,000 mt. The total registered volume of alumina warrants in Shandong remained unchanged from the previous trading day at 0 mt, in Henan unchanged at 0 mt, in Guangxi unchanged at 0 mt, in Gansu unchanged at 0 mt, while in Xinjiang it increased by 6,038 mt from the previous trading day to 217,000 mt.

Overseas Market:As of October 15, 2025, the FOB Western Australia price for alumina was $323/mt, the ocean freight rate was $23.85/mt, and the USD/CNY selling rate was around 7.14. This price translates to a selling price of approximately 2,880.10 yuan/mt at mainstream domestic ports, which is 62.38 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 alumina operating capacity continued to fluctuate at highs recently. Although production cuts of 400,000 mt occurred in Shanxi due to supply issues during the rainy season, domestic alumina supply surplus pressure persisted. According to SMM model calculations, some high-cost enterprises have already entered a loss-making state. However, based on an SMM survey, only sporadic northern enterprises have currently taken production cut actions. The main reasons are that while alumina profit margins have been compressed, the industry's overall average cost still allows for profits compared to the average online price, coupled with ongoing long-term contract delivery demands. As winter stockpiling approaches, spot procurement enthusiasm among some aluminum smelters has improved, but the overall spot market remains in a state of loose supply. Against the backdrop of high alumina inventory, spot alumina prices are expected to continue their downward trend in the short term.