Spot Alumina Prices Decline Further; Futures Most-Traded Contract Continues to Fluctuate Downward [SMM Morning Comment on Alumina]

SMM Alumina Morning Comment on January 9

Futures Market: During the night session, the most-traded alumina 2502 contract opened at 4,123 yuan/mt, with a high of 4,142 yuan/mt and a low of 4,080 yuan/mt, finally closing at 4,091 yuan/mt, down 89 yuan/mt or 2.13%. Open interest stood at 104,000 lots.

Spot Market: Yesterday, 5,000 mt of spot alumina were traded in Henan at an ex-factory price of 4,980-5,000 yuan/mt, while 2,000 mt were traded in Shanxi at an ex-factory price of 4,850 yuan/mt.

Industry News:
(1) On January 4, 2025, Vietnam National Coal and Mineral Industries Group (TKV) outlined its 2025 production targets, planning to produce 1.3 million mt of alumina for the year. In Q1, Lam Dong Aluminum Company is expected to produce 185,000 mt of alumina and sell 175,000 mt. In 2024, TKV achieved an alumina production of 1.41 million mt and sales of 1.39 million mt, exceeding its annual target. Additionally, the annual profit reached VND 623 billion, up 42% YoY.
(2) The government of Guyana announced that, driven by significant investments from Bosai Minerals Group (BMGG), the country's bauxite production is expected to increase by 400,000 mt in 2025, continuing the strong momentum of a 250,000 mt increase in 2024. The production growth mainly stems from Bosai Group's large-scale expansion plan, which aims to raise the annual capacity of its Linden Bauxite Project from 1 million mt to 3 million mt. Key facilities for the expansion include the newly constructed Bosai terminal and a 20-kilometer conveyor system to transport bauxite directly from the mine to the terminal. By the end of 2024, the terminal construction was completed. Furthermore, the group plans to invest $470 million in building an alumina refinery to enhance vertical integration within the industry chain.

Spot-Futures Price Spread Daily Report: According to SMM data, as of 11:30 a.m. on January 8, the SMM alumina index showed a premium of 1,292 yuan/mt against the most-traded contract's latest transaction price.

Warehouse Warrant Daily Report: On January 8, the total registered warehouse warrants for alumina remained unchanged from the previous trading day at 15,300 mt. By region, the total registered warehouse warrants in Shandong, Henan, and Gansu remained at 0 mt, Guangxi at 301 mt, and Xinjiang at 15,000 mt.

Overseas Market: As of January 8, the FOB Western Australia alumina price stood at $681/mt, with an ocean freight rate of $22.45/mt. The USD/CNY exchange rate hovered around 7.35. This price translates to an external selling price of approximately 5,922 yuan/mt at major domestic ports, 426 yuan/mt higher than domestic alumina prices, keeping the alumina import window closed.

Summary: Recently, the weekly operating rate of alumina has rebounded slightly, and alumina supply has increased slightly. However, with technological transformations and production cuts in aluminum smelters in Guangxi and Sichuan, alumina demand has slightly declined. The previously tight alumina supply has eased. By the end of December, aluminum smelters' alumina raw material inventories had rebounded slightly, while downstream restocking and purchasing enthusiasm weakened. Acceptance of high-priced spot alumina has decreased, and reports of low-priced spot transactions have emerged in various regions, especially in Shanxi and Henan, where spot alumina transaction prices have continued to decline. Suppliers' willingness to sell has increased, and spot alumina prices are expected to continue their downward trend in the short term.

[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 unrelated to SMM.]