Shandong Alumina Caustic Soda Costs Reduced, Alumina Registered Warehouse Warrants Decrease Again [SMM Alumina Morning Comment]

SMM Alumina Morning Comment 12.26

Futures Market: During the overnight session, the most-traded alumina 2502 futures contract opened at 4,678 yuan/mt, reached a high of 4,678 yuan/mt and a low of 4,636 yuan/mt, and finally closed at 4,666 yuan/mt, down 3 yuan/mt or 0.07%. Open interest stood at 135,000 lots.

Industry News:

1. On October 4, 2024, Rusal announced plans to double the capacity of the Boguchansky aluminum smelter in Siberia to 600,000 mt by 2030. However, on November 26, the company issued a statement saying it would cut annual aluminum production by 6% due to soaring global alumina prices and slowing domestic demand. According to SMM, the company is not reducing its existing capacity but has canceled its previous expansion plans. Its annual capacity is expected to remain around 4.5 million mt in the coming years, consistent with recent production levels.
2. According to SMM, starting December 26, a major alumina refinery in Shandong adjusted its purchase price for 32% ion membrane liquid caustic soda, lowering it by 10 yuan/mt from 795 yuan/mt to 785 yuan/mt ex-factory under the two-invoice system (equivalent to a price of approximately 2,453 yuan/mt on a 100% basis).
3. According to a December 24 announcement by the Jingxi Municipal Government, the mining rights for the bauxite mine in the Dajia mining area of Jingxi City, operated by Guangxi Xinfa Aluminum & Electricity Co., Ltd., have been newly registered and approved by the Natural Resources Department of Guangxi Zhuang Autonomous Region, with a mining license issued. In accordance with Article 8 of the "Administrative Measures for the Registration of Mineral Resource Exploitation" (State Council Order No. 241), the details of the mining license are as follows:

Mine Name: Bauxite Mine in the Dajia Mining Area, Jingxi City, Guangxi Xinfa Aluminum & Electricity Co., Ltd.

Mining License Number: C4500002024103110157573.

Mining Rights Holder: Guangxi Xinfa Aluminum & Electricity Co., Ltd.

Address of Mining Rights Holder: Aluminum Industrial Park, Quyang Town, Jingxi City.

Type of Mineral: Bauxite.

Mining Method: Open-pit mining.

Production Scale: 1.16 million mt/year.

Mining Area: 19.9643 square kilometers.

Validity Period: From October 29, 2024, to February 28, 2034.

Spot-Futures Price Spread Daily Report: According to SMM data, on December 25, the SMM Alumina Index showed a premium of 1,091 yuan/mt against the most-traded contract's latest transaction price at 11:30.

Warehouse Warrant Daily Report: On December 25, the total registered warehouse warrants for alumina decreased by 4,807 mt from the previous trading day to 22,900 mt. The total registered warehouse warrants in Shandong, Henan, and Gansu regions remained unchanged at 0 mt, while those in Guangxi remained unchanged at 600 mt. In Xinjiang, the total registered warehouse warrants decreased by 4,807 mt to 22,300 mt.

Overseas Market: As of December 25, the FOB Western Australia alumina price was $670/mt, with ocean freight rates at $22.4/mt. The USD/CNY exchange rate sell price was around 7.32. This translates to a price of approximately 5,804 yuan/mt CIF major ports in China, 73 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: Domestic alumina operating rates remained largely stable, while downstream demand saw a slight decline due to production cuts in Southwest China. The tight alumina supply situation has improved compared to earlier periods. Recent spot alumina transactions have been relatively sluggish, with sporadic deals showing a slight downward shift in transaction price centers. Spot alumina prices in Shanxi and Henan experienced a slight correction. Although the spot alumina market has not seen significant supply easing, downstream buyers remain highly cautious due to strong resistance to high prices, leading to conservative purchasing. In the short term, spot alumina prices are expected to fluctuate and adjust.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are not related to SMM.]