Driven by profitability, alumina operating capacity rebounded, with operating capacity up 2% MoM in July

SMM News on July 31:

According to SMM data, China's metallurgical-grade alumina production in July 2025 (31 days) increased by 5.40% MoM and 6.65% YoY. As of the end of July, China's existing capacity for metallurgical-grade alumina stood at approximately 110.32 million mt, with actual operating capacity rising by 2.00% MoM and an operating rate of 81.6%.

Bolstered by macro policy news such as "anti-rat race competition" and "capacity reduction," alumina futures strengthened, with the most-traded contract reaching a peak of 3,577 yuan/mt during the month. The futures-to-spot arbitrage window opened, prompting futures-to-spot traders to actively inquire and purchase, tightening spot supply. Sellers refused to budge on prices, leading to a rise in spot alumina prices. Alumina refineries' profitability improved during the month, and apart from a few routine maintenance activities, no production cuts or maintenance news were heard. Operating capacity increased by 1.77 million mt MoM.

By region:

In July, alumina capacity in south China saw both increases and decreases. A few alumina refineries underwent routine maintenance, but the impact on alumina production was relatively small. Additionally, some alumina refineries began reducing their operating capacity from June and did not recover in July, leading to a slight decrease in production. Apart from this, with firm alumina prices and moderate profitability, some alumina refineries increased their operating capacity. Overall, operating capacity in south China decreased by 20,000 mt MoM.

In July, driven by profitability, alumina operating capacity in north China increased significantly, with an absolute MoM increase of 1.78 million mt.

Next month's forecast: Entering August, spot alumina prices are currently fluctuating at highs, and alumina refineries' profitability remains moderate. There is no strong intention for production cuts or maintenance, and only a few companies are expected to undergo routine maintenance, which will have a limited impact on production. It is forecasted that China's operating capacity for metallurgical-grade alumina will increase slightly in August, reaching approximately 90.56 million mt/year.